IBM recharges network group

Flurry of Ethernet, TCP/IP products boosts NHD reorganization.

By Marc Songini
Network World, 4/27/98

Raleigh, N.C. - IBM has revamped its Networking Hardware Division (NHD) and will launch a barrage of switching components in an effort to juice up the vendor's flagging network business. Together, the moves are aimed at winning back the hearts and minds of former customers with offerings such as new Ethernet and TCP/IP gear.

The strategy is also aimed at positioning the IBM division as a serious supplier to the Internet service provider, telco and remote access markets.

"This is a long-overdue but aggressive move by IBM/NHD," said Sam Albert, a long-time IBM watcher and president of the Sam Albert Associates consultancy, in Scarsdale, N.Y. "NHD has watched whole industries grow up around it - Ethernet and TCP/IP, for example - and now they want a bigger piece of the pie."

On the reorganization front, NHD has been broken into three clusters: workgroups, enterprise and service providers. The formation of the service provider group is the first concerted move NHD has made to target the ISP/telco market, officials said. IBM in the past had sold some telco products through its now-defunct partnership with Cascade Corp.

Rob Zimmer, business line manager for the service provider group, said his unit would offer ISPs secure platforms for outsourced electronic commerce services. One of the first goals of the NHD reorganization will be to help IBM create partnerships with third-party telco providers to offer public frame relay services. According to Zimmer, users could achieve considerable cost savings by outsourcing their nets, compared with running their own dedicated WANs. NHD also intends to offer Web page caching, secure SNA-to-IP migration, voice over IP and other Internet technologies to ISPs. The workgroup unit will offer products and services to the sub-1000 seat remote branch office market.

``We'll focus on the more commodity end of business," said Jose Garcia, workgroup business line manager.

For example, the group last week announced it would bundle IBM NetFinity PC servers and IBM's 2210 routers as an integrated package for remote branch offices (NW, April 20, page 17).

Garcia said his workgroup line, as opposed to the other two new groups, must be concerned with things such as time to market, packaging, inventory control, and what type of software to preinstall on his hardware.

The enterprise group, led by enterprise network business line manager Bob Greenberg, comprises the more traditional NHD products: high end routers, ATM switches, front end processors and network management software.

Under the last NHD business model, which was in place for about a year, there were five separate product groups, noted Don Haile, vice president of development for NHD.

``We had five vertical structures and each had its own [products]. We had a team doing adapters, a team doing access products, a team on switches, and never the twain would meet," Haile said.

``With the new organization, we in-tend to be more interactive within NHD and with other IBM business groups," he said. The architect of NHD's reorganization is James Vanderslice, the general manager of NHD. He took over the ailing division a year ago. Vanderslice had successfully turned around IBM's printer and storage division in previous years.

The user view

For at least one user, the NHD moves were right on target.

``I've been following this industry for about 30 years, and it was a little disheartening to see [NHDs decline in industry stature]," said Jerry Wetherington, systems coordinator at the University of Florida, in Gainesville, a large IBM user.

The packaging of NHD products with the servers is great news for users because having to cobble together networks out of different products from different IBM divisions was confusing and difficult, Wetherington said.

For others, the moves seemed long overdue.

``[NHD has] an image problem, and there is a lot of recovery to do," said Nick Francis, president of The Madison Group, Inc., a Cary, N.C.-based consultancy.

While NHD's move is sound, the question remains whether the corporate leadership at
IBM will allow NHD to do the things it must to be competitive, such as acquire companies whose technologies NHD needs, Francis said.