One of the topics that we frequently wrote about in 2010 was how the adoption of virtualization and cloud computing was one of the primary factors driving the acquisition strategy of many vendors.
One of the topics that we frequently wrote about in 2010 was how the adoption of virtualization and cloud computing was one of the primary factors driving the acquisition strategy of many vendors.
We also wrote about how those acquisitions were fueling an ongoing coalescence of the IT industry around a few key players. Some of the players that we wrote about were IBM, Cisco, HP, Oracle and Dell. We are going to use the next two newsletters to provide more insight into how one of the players, IBM, is likely to leverage its acquisitions to position itself in the IT market.
It is important to realize that in the early to mid 1970s IBM developed Systems Network Architecture (SNA), which was a complete protocol stack for interconnecting computers and their resources. In the 1970s and 1980s, SNA was widely deployed and as a result, IBM was a leader in the networking business roughly a decade before Cisco was created.
In addition to developing SNA and the equipment to support it, in the early 1980s IBM introduced the IBM global network and subsequently became a major network service provider.
However, in the late 1990s IBM sold its network equipment business to Cisco and it sold the IBM global network to AT&T. Having sold those assets, IBM had been staying far away from networking – that is until recently. For example, in the decade that began in 2001, IBM acquired approximately 100 companies. The acquired companies, such as SPSS, were typically in the business of providing software solutions. However, in September of 2010 IBM acquired BLADE Network Technologies. BLADE is known primarily as a provider of switches for blade servers. BLADE claims that their switches add network intelligence to the blade enclosure while enhancing performance and providing high availability, scalability, manageability, and security to the blade environment.
If BLADE Network Technologies is the only network company that IBM acquires then it is a real stretch to say that IBM is back in networking. However, for the last year or so there have been strong rumors that IBM would acquire Juniper Networks. Given that Juniper’s current market capitalization is roughly $20 billion, acquiring Juniper would be a major undertaking, even for a company the size of IBM. If IBM doesn’t acquire Juniper, there are some other lower cost, high-value options available to it. This includes both Extreme Networks and Force10. However, as we will explain in the next newsletter, independent of which companies IBM acquires, we don’t see IBM becoming a traditional network company.
