IBM to buy data centre switching specialist

FRAMINGHAM, Mass. — IBM Corp. is buying privately held data center switching company Blade Network Technologies Inc. to expand its data center portfolio into networking and heighten competition with rivals.

Financial terms of the deal, announced Monday, were not disclosed. Investors in Blade include Garnett & Helfrich Capital, NEC and Juniper Networks Inc.

Blade specializes in blade and top-of-rack switches that connect racks of servers to other data centre resources, such as storage arrays. IBM is an OEM reseller of Blade’s switches — like the one pictured — and has been aligned with the company since 2002. IBM says half of its System x BladeCenter server racks currently attach to or use Blade switches.
“I’m surprised it took [IBM] this long,” said Zeus Kerravalla, senior vice-president of the Yankee Group.
“If you look at what’s happening in the data centre, there’s a definite land grab [by manufacturers] to capture more of the infrastructure to support the virtualized data centre that’s coming,” he said in an interview Tuesday. That’s why Hewlett-Packard Co. bought 3ComBrocade Communications Systems Inc. bought Foundry Networks  Inc. and Cisco Systems Inc, is building data centre servers, he said.

Blade is the No. 2 vendor of 10Gbps Ethernet Blade switches for the data centre, behind Hewlett-Packard Co. and ahead of Cisco Systems Inc., according to Dell’Oro Group. Of the 762,000 fixed 10G Ethernet ports that shipped in the second quarter, 46 per cent were from top-of-rack switches and 31 per cent were from Blade switches, Dell’Oro notes.

Blade had a 0.9 per cent share of the US$16 billion overall Ethernet switching market in 2009, according to Dell’’Oro. Gartner also placed Blade second in terms of port shipments of data centre Ethernet switches in 2009, with a 17.4 per cent share of the 10 million ports shipped. Cisco was first in both port shipments (53 per cent) and revenue share (48 per cent of the US$1.9 billion market) in data centre Ethernet in 2009, according to Gartner. HP was second in revenue and fourth in port shipments.

IBM was a non-player, according to the Gartner data. Blade changes that.

“Blade will help IBM better integrate networks with its systems, optimizing them for workloads that require high-speed and low-latency performance such as cloud computing and business analytics,” Brian Truskowski, general manager of IBM system storage and networking, said in a statement.

Blade also provides software to virtualize and manage cloud computing and other workloads. Its customers include more than half of the companies on the Fortune 500 across 26 industry verticals, including automotive, telecom services, education, government, healthcare, defence and finance, according to IBM.
Kerravala said the deal raises the question of  how deep IBM will go into networking. Given the recent efforts by Dell and HP, he said, it should be more aggressive.  
The acquisition is expected to close in the fourth quarter of 2010.
(With files by Howard Solomon, Network World Canada)

(From Network World U.S.)

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