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June - 2009 - issue > Tech Tracker

IBM Intrudes Cisco's Networking Turf with Brocade Deal

Eureka Bharali
Tuesday, June 2, 2009
Eureka Bharali
IBM, a computer technology provider delves into networking sphere again by striking a deal under which it will re-brand and resell the series of enterprise IP and Ethernet switches and routers of Brocade, a data center networking solution provider. The deal is a direct threat to IBM's partner Cisco, a networking solution provider, who enjoys 77 percent in the Ethernet switch segment. IBM-Brocade partnership took shape after Cisco stepped into the server market, posing competition to IBM. IBM had renounced its own networking solutions with Cisco acquiring its entire range of networking patents and products along with the customers for $2 billion in 1999. As per the agreement between IBM and Cisco, the two companies formed a strategic alliance that allowed IBM's global service to resell Cisco's products. Cisco's intrusion into the server market against IBM has proved to be a boon for the small players in networking space, with IBM partnering with Juniper Networks for the cloud-based solutions. Under the original equipment manufacturer (OEM) deal, IBM will resell the networking hardware of Foundry Networks, which was acquired by Brocade in July 2008.

Cisco, however, believes that the new deal with Brocade would be a greater threat to HP, a networking hardware solution provider, who is aggressive to take over Cisco in the Ethernet switch market. "In reality, it's an anti-HP strategy. IBM needed to counter HP’s data center (DC) strategy and broader DC portfolio offering. So, Brocade's Foundry gave them what they needed," says Cisco's Director of Storage Networking, Bill Marozas. The new deal is seen to be a step towards IBM's new Dynamic Infrastructure initiative, a data center heavily reliant on virtualization and automation from hardware to the application. HP too unveiled a similar initiative that ties computing and networking together and focuses on virtualization and automation along with leveraging their own product lines.

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