IBM executives reestablish NHD

Donald Haile is one of the shiny blue suits from the golden age of IBM networking. Today, he is vice president of development for IBM's Networking Hardware Division and is part of a team of new executives charged with bringing NHD back to its former glory. This week, a group of Network World editors caught up with Haile to talk about how the battle is going. Q. IBM is rarely mentioned in the same breath as Cisco Systems, Inc., 3Com Corp., Bay Networks, Inc. and other big network companies. Does that bother you? A. We know we have a lot to do. I know we want to be in the lead. I'm tired of reading things where bake-offs happen and it's Cisco and 3Com and Bay or Cabletron. We're as big as at least two of those companies combined and it bugs me that we're kind of out if it. It's also sort of a personal statement. You get behind the eight ball, then you're trying to catch up with the competition. Q. Your competitors have some aggressive acquisition strategies. What is NHD's acquisition plan? A. Acquisitions are funny. We've looked at other companies, talked a lot. I don't think any of us are opposed to that. We're building products fast, but in the case of things like high-end switches or routers it takes a while. There's nobody in IBM saying NHD can't make an acquisition. Take Gigabit Ethernet: I don't think we're ready to make a buy there. We're looking around. There are five companies I could name at the drop of a hat. We did Tivoli. That was an acquisition of over US$100 million. I'd love to see something like that. We're getting a tough, shark-like sales force. It's helped us immensely and caused the rest of our sales force guys to look at Tivoli and see what they're doing. Acquisitions change the corporation. It changes the culture. We were lucky in what we picked up there. Q. There have been rumors that IBM might spin off NHD as a separate entity. Has there been serious talk within IBM about selling NHD? A. Yes. But this is a profitable group . . . very profitable business. It's not as much as we'd like, but it certainly brings in a substantial amount of revenue. Any discussion about NHD going away in the next four months was probably just wishful thinking on the part of our competitors. We have an aggressive plan to roll out new products and services through the year 2000, so we feel pretty rock solid now. We have a huge amount to do to get products out channelwise, but we do not doubt the viability of our products. Q. One of your tasks when you started this job was to eliminate old products and streamline NHD's offerings. Has that effort been successful? A. For a long time we were afraid to cannibalize our own children. I was able to redirect about 10 percent of our budget to products that promised the most growth. And so we took it out of things that were growing slower. Did I kill a big product to do that? No. Q. Playing devil's advocate for a moment, why did IBM take so long to go whole-hog in to the Ethernet and TCP/IP worlds? A. Token ring was still immensely strong until a couple of years ago. And there's always this hesitancy to eat your children. Sort of like my favorite former manager Ellen Hancock. She wanted one path, and she wanted to go down that one path come hell or high water. It doesn't work that way. We were doing SNA and all of sudden, [Open Systems Interconnection] came in. I'll bet you we put $100 million in to OSI. I walked in one day, and said, 'I've gotten beaten up enough times, we have to do TCP/ IP.' It's the same thing here. It's like, what will my increased development dollars for TCP/IP and Ethernet do to my SNA? Well guess what, TCP/IP's going to happen whether we go in the other direction or not. People say we're SNA forever, but that's just not the case now. This time as we roll out Ethernet products, I think, channels, channels, channels. We're building this stuff and you got to get it out in the field. You've got to get it out to your customers. We're going to turn it pretty fast. One of things will be Gigabit Ethernet. We know we have to do it. We're working hard to get it done.