Government gives green light to Cisco's buyout of IBM net biz

By Marc Songini
Network World, 12/13/99

RESEARCH TRIANGLE PARK, N.C. - The process of transforming IBM network customers into Cisco customers can begin in earnest now that the government has given its formal blessing.

The Department of Justice and the Federal Trade Commission have decided they have no objection to Cisco's approximately $600 million buyout of the switching and routing portion of IBM's Networking Hardware Division (NHD). To ease the migration path of NHD customers to Cisco gear, the companies plan to begin interoperability testing between their separate products, sources say. It is also likely that Cisco will tweak its management software to handle IBM devices.

There appears to be little apprehension among customers about moving from IBM to Cisco, although one manager expressed concern about narrowing market options.

"The problem I have is Cisco is coming too close to being a monopoly," says an IT director at a large enterprise network, who spoke on the condition of anonymity. "We always want to have two vendors, and in this area, we don't. Cisco is the networking company." The manager says that while Cisco is usually very responsive to customer requests, he fears that could change and "there would be no alternative" vendor.

Most users expressed greater confidence, however. With its vast market share, Cisco is a natural choice for users to go to for their network gear, says Ron Thielen, an IT planner at the University of Chicago and president of the SHARE user group, which includes IBM and Cisco customers. Thielen says migrating to Cisco equipment is not a concern for most SHARE members. In fact, SHARE intends to add more Cisco teaching sessions to assist the IBM users in their migration efforts.

"Cisco approaches IBM in terms of responsive service and support," says Donald Haile, an IS manager at Fidelity Investments in Boston. "They have a mature service organization, and they know how to get things done."

Haile believes NHD customers should be reassured by the fact that Cisco is populated by a number of ex-IBMers, including company CEO John Chambers.

Fidelity's massive network includes thousands of Sun servers and several mainframes attached to Cisco routers via Channel Interface Processors. Fidelity has been migrating from SNA to IP for the past five years and except for the mainframe-to-mainframe communications, is mostly an IP shop. Fidelity still has 15 NHD 3745 Communications Controllers to run SNA sessions and they work very well; nevertheless the company will probably shed them in the next couple of years, Haile says.

One network manager at a large insurance company who asked not to be named is more upbeat today than he was when the Cisco-IBM deal was first announced. His company network was primarily Cisco-based but had about 300 users who relied on 15 IBM 2216 routers. Now his company intends to phase out the IBM gear and run the entire network on Cisco equipment, making it easier to manage. "Cisco has treated us well," he adds.

"We chose Cisco as our vendor about four years ago," says Laurence Kung, a senior network manager at MCI WorldCom. "This validates the path we chose, now that the industry is taking the same one."

MCI WorldCom is completing an SNA-to-IP migration and still has some IBM gear in its network, Kung says, but is primarily a Cisco shop. While the migration was positive overall, there were difficulties doing things such as getting IBM monitoring software to extract data from the Cisco devices, he says. With IBM and Cisco now partners instead of direct competitors, users may even find it easier to conduct their SNA-to-IP migrations, he suggests.