IBM Blade Network Buy Bolsters Cloud, Data Center Efforts

IBM is buying Blade Network Technologies to boost the cloud enterprise networking capabilities of its servers and better compete with the likes of HP, Oracle and Cisco in the converged data center space.

IBM is buying Blade Network Technologies in a move that gives it greater networking and cloud capabilities and more ammunition as it competes with the likes of Hewlett-Packard and Cisco Systems in the burgeoning converged data center space.

IBM officials announced Sept. 27 that the company intends to acquire Blade in a deal that is expected to close in the fourth quarter. No financial details were announced.

Blade makes blade server and top-of-rack switches and software designed for cloud computing and virtualized environments. IBM officials said the company plans to incorporate Blade's products into its servers, which are being optimized to handle the large streams of data generated in areas such as cloud computing environments and "smart" infrastructure, from power grids to traffic systems.

"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's System Storage and Networking business, said in a statement. "For example, faster data transport enables faster decisions important for analytics workloads. Blade will increase IBM's system networking development, sales, support, skills and awareness and help IBM build smarter systems that are optimized for client requirements."

The deal makes a lot of sense for IBM, Zeus Kerravala, an analyst with The Yankee Group, said in an interview with eWEEK. It enables IBM to incorporate strong networking capabilities into its systems, and it also enables the company to compete with HP, Cisco, Oracle, Dell and others looking to provide businesses with converged data center packages that tightly integrate compute, storage, networking, management and virtualization capabilities into single offerings.

"It gets [IBM executives] a very important product, which is blade switches, for their own products, but it also allows them their own little switch business," Kerravala said. "IBM has been very quiet in this area."

Over the past 18 months or so, IBM has announced OEM deals or other partnerships with a wide range of networking gear providers, including Juniper Networks and Cisco. However, the market continues to consolidate-as in HP's $2.7 billion acquisition of 3Com earlier in 2010-as vendors look to bulk up their converged data center offerings.

A spokesman for Juniper said the deal benefits the company, which not only partners with IBM but also has invested in Blade.

"All three companies are aligned in our commitment to addressing customers' most challenging connectivity needs for next-generation data center networks," the spokesperson said in a statement emailed to eWEEK.

The partnerships give IBM a lot of flexibility, but also having a networking business in-house will help it out, Kerravala said. With its own business, IBM can "develop that if you own it, rather than relying on some other person's timeline," he said. "[The deal] does move them into the networking realm."

It also lets IBM give its customers options as they're building or upgrading their infrastructures. Not every business will want to buy all products from the same vendor, and IBM will be able to give customers the choice of an in-house portfolio or a selection from third-party vendors.

On the competitive front, Kerravala described what he called a "land grab" by the larger vendors as they move to shore up and expand their data center offerings. HP has gone on a shopping spree, including the 3Com deal and the acquisition of storage vendor 3Par; Oracle-with its purchase of Sun Microsystems-is building up its hardware and networking capabilities; Cisco has expanded into servers; and Dell is raising the profile of its networking business, most recently hiring a former Cisco executive to run it.

IBM has been relatively quiet in the networking arena, but the Blade deal changes that, Kerravala said.

That said, IBM has been doing its share of buying. For example, IBM Sept. 20 announced it was buying data warehousing firm Netezza for $1.7 billion.