IBM, Brocade Take Aim at Cisco

IBM for years has been reselling networking products from Brocade, but a new deal expands that partnership into the Internet networking space, an area traditionally dominated by Cisco Systems. The move comes weeks after Cisco announced its UCS data center initiative, which includes Cisco getting into the hardware business, and IBM's new deal with Brocade is seen as a way for IBM to bolster its own integrated data center solutions. Other hardware makers, including HP and Dell, may look for similar deals with smaller networking companies if the IBM-Brocade partnership is successful.

In a move seen to be targeting Cisco Systems, Brocade Communications Systems and IBM announced April 28 that they are expanding their partnership to include Ethernet switching and routing products.

IBM and Brocade said IBM will rebrand and resell Brocade's family of enterprise IP networking products, creating a strong presence in an area that has been led for years by Cisco.

The deal comes just weeks after Cisco announced it was pushing deeper into the data center with its Unified Computing System initiative, a strategy designed to create a more integrated data center solution that includes hardware, networking, storage and software aspects. Some of these products come from Cisco, while others come from partners such as VMware, EMC and Intel.

A key part of the UCS strategy was Cisco announcing that it would make its own blade servers powered by Intel's new Xeon 5500 series chips.

Such rivals as Hewlett-Packard and Sun Microsystems also have made aggressive pushes into the space, and Oracle could become a factor as well if it goes through with its planned $7.4 billion acquisition of Sun.

"This move follows many other data center consolidation stories we've already had this year (Oracle/Sun, Cisco UCS, etc.) and is being driven by the evolution to Anywhere IT," Zeus Kerravala, an analyst with Yankee Group, said in an e-mail. "It takes a relatively small vendor-Brocade-and gives them a huge distribution channel with IBM. The fact that IBM will be putting its own label on the product makes this much more than a typical reseller relationship."

It also puts pressure on Cisco, Kerravala said.

"OEM relationships are common in storage networking but not in IP networking," he said. "If this move is successful, it could open the door for other server vendors (Dell, Oracle/Sun, etc.) to OEM other smaller network vendors, further disrupting the market that Cisco has had a lock on for years."

IBM and other OEMs, including HP, have been using Brocade's networking equipment for years-and also have been partnering with Cisco. Among the Brocade products IBM already sells are the multiprotocol DCX Backbone SAN (storage area network) offering and Fibre Channel directors, as well as stand-alone and embedded switches, host bus adapters, and related software.

However, the new deal expands on that. Brocade in July 2008 announced it was buying Foundry Networks for $3 billion in a deal that gave it products for building Internet-based networks and made it a stronger competitor to Cisco. The Foundry deal closed in December 2008. Now IBM will resell IP networking products Brocade acquired from Foundry, including the NetIron and FastIron Ethernet routers and switches. Those IBM-branded products are expected to be launched in May.

Other Brocade products will be added to IBM's list over time, Brocade officials said in announcing the deal. IBM and Brocade also will work together on sales, marketing, training and support programs around the products.

Brocade officials say such OEM deals will play a key role in the company's future.

"This agreement with IBM underscores Brocade's long-term commitment to its OEM customers, a strategy we believe delivers the full promise of next-generation enterprise networking solutions in a pragmatic, nonproprietary way to protect customers' IT investments," Brocade CEO Mike Klayko said in a statement.