NEW YORK ( TheStreet) -- Strength in storage helped Brocade ( BRCD) blow past Wall Street's estimates in its third-quarter results this week. The networking giant, however, expects great things from the emerging market for Software-Defined Networks (SDN). A number of companies, including HP ( HPQ - Get Report), Cisco ( CSCO - Get Report) and IBM ( IBM), are ramping up their efforts around SDN, a set of techniques for managing network traffic flows through software. Speaking during Brocade's third-quarter conference call, CEO Lloyd Carney said that Brocade has more downloads and more deployments in the SDN space than any other vendor. The networking specialist, however, acknowledges that it's still early days for the SDN market. "SDN is a revolution in the long-term and it will take many years to develop - in the short-term SDN adoption is going to be evolutionary," said Brocade CTO Ken Cheng, during a phone interview with TheStreet following the company's results. Cheng said while SDN revenue will be immaterial in the near term, the market opportunity will be $2.5 billion in 2018. "The Compound Annual Growth Rate is in the double digits," he said. "We anticipate that we will see larger deployments next year." "We want to work with the carriers, telcos, mobile network operators and cloud service providers - these are the early adopters of SDN," he added. Brocade is already enjoying success with its Vyatta virtual router, according to Cheng, who noted that it been downloaded more than 1 million times and is widely deployed around the world. Brocade acquired virtual routing pioneer Vyatta last year, beefing up its virtual data center story. The Vyatta virtual router can be downloaded from the likes of Amazon's ( AMZN) AWS and Rackspace ( RAX). "Some of our SDN wins were around Rackspace - we powered their OpenCloud offering that they announced about a month ago," said Cheng. Other Brocade products in the SDN space include a virtualized version of its ADX load balancer and the MLX, an SDN-enabled router. Brocade's MLX is also used within the Internet2 project, a next-generation Internet which aims to boost collaboration between more than 200 universities. Brocade has also been making investments around OpenDaylight, an open source industry project to build a framework for SDN. This encompasses technologies such as SDN controllers, interfaces, protocol plug-ins, and applications.
Tight cost controls helped Brocade beat analysts' forecasts in its third-quarter results. Carney, who took over as CEO earlier this year, pointed out strong Storage Area Networks (SAN) sales and robust VDX switch revenue on the earnings call as well. "In our view, evidence is emerging that a more focused, streamlined BRCD is in the works only ~2 quarters into the new CEO's tenure," wrote ISI Group analyst Brian Marshall, in a note. Marshall, who has a 'buy' rating on the company, raised his Brocade price target to $9 from $7.50. Shares of Brocade, which have climbed more than 48% this year, crept up 0.15% to $7.92 during Friday trading. --Written by James Rogers in New York. Follow @jamesjrogers >To submit a news tip, send an email to: email@example.com.