There has been a lot of press about IBM’s acquisition of BNT (Blade Network Technologies) focusing on the economics and market share of BNT as a competitor to Cisco and HP’s ProCurve/3Com franchise. But at its heart the acquisition is more about defending and expanding a position in the emerging converged server, networking, and storage infrastructure segment than it is about raw switch port market share. It is also a powerful vindication of the proposition that infrastructure convergence is driving major realignment in the vendor industry.
Starting with HP’s success with its c-Class blade servers and Virtual Connect technology, and escalating with Cisco’s entrance into the server market, IBM continued its investment in its Virtual Fabric and Open Fabric Manager technology, heavily leveraging BNT’s switch platforms. At some point it became clear that BNT was a critical element of IBM’s convergence strategy, with IBM’s plans now heavily dependent on a vendor with whom they had an excellent, but non-exclusive relationship, and one whose acquisition by another player could severely compromise their product plans. Hence the acquisition. Now that it owns BNT, IBM can capitalize on its excellent edge network technology for further development of its converged infrastructure strategy without hesitation about further leveraging BNT’s technology.
Cisco, on the other hand, now finds itself in an escalating confrontation with another of its former key system partners. As has been the case with HP, IBM will certainly continue to resell Cisco switches, but as IBM continues to flesh out its converged infrastructure stack, Cisco’s role will diminish and their relationship with Cisco will become more distant, especially from the position of relative strength that Cisco enjoyed with IBM as HP began to emphasize its Virtual Connect technology. At the same time, it appears as if IBM does not have the same aspirations to extend their reach to the core network, so their relationship with other partners such as Juniper and Brocade will probably not be perturbed in the immediate future. IBM’s other major systems franchises, POWER/AIX and mainframes, will remain relatively unimpacted by this acquisition unless IBM chooses to extend the BNT technology to these domains, but that looks unlikely in the near term, as there are an immense number of clever and creative things that IBM can do in the x86 space to occupy their time and effort.
The impact on I&O professionals will probably be muted for the next couple of years. IBM customers will still be able to buy the Cisco products they already are familiar with through IBM, and Cisco will certainly continue to aggressively sell into IBM’s base for edge connectivity as well as into the core. Most importantly, both IBM and Cisco understand that they cannot compromise the experience of the many customers, current and future, who choose to run IBM systems with Cisco networking in the edge/access layer as well as the core network, so I&O groups need not be concerned that support for IBM customers will be compromised.
What is certain is that the competition in integrated infrastructure products will intensify, the rhetoric more heated, and customers will benefit from a continual stream of innovation.
How does this affect your strategy? Does it change any of your current or future plans?