IBM

Oracle isn’t after Brocade, but what about Extreme?

Oracle CEO Larry Ellison dismissed the Wall Street Journal’s speculation that his company (among others) was interested in buying Brocade while speaking at the comapny’s annual shareholders meeting yesterday, according to MarketWatch’s John Letzing, IBM, HP and Juniper remain potential suitors according to the Internet rumor mill.

Meanwhile, Extreme Networks’ stock price took a relative beating on Tuesday after it lowered its earnings for its first fiscal quarter (which ended Sept. 27). Wall Street analysts were expecting Extreme to make $80.4 million but Extreme says it will be closer to $66 million. Extreme cited supply chain problems, which should scare customers. Other networking vendors have admitted to supply chain problems in the wireless LAN market, but I haven’t heard anything about wired networking supply chain problems before. Extreme said it has lost some deals and had other delayed by the problem. Are Extreme’s suppliers giving preference to larger networking vendors?

Extreme’s market capitalization is at $231 million as I write this. It would come a lot cheaper than Brocade and would offer someone like HP ProCurve a nice complementary line of data center switches.

Brocade continues to exploit friction between Cisco and systems vendors

It’s debatable just how much Cisco’s move into the server market with its launch of the Unified Computing System (UCS) has truly soured the networking giant’s strategic alliances with IBM and Dell, but Brocade has wasted no time in exploiting whatever separation may arise as a result.

Cisco’s UCS strategy banks on the need for tight integration between servers, storage and networks in next-generation data centers, particularly those that use a unified fabric, such as converged Ethernet, to transport all forms of data center traffic on a single medium. Cisco see an opportunity here, believing that many enterprises will want to get all their data center equipment from a single vendor in order to build such a highly-integrated infrastructure.

Of course, as part of its plan to exploit this potential market, Cisco has introduced its own line of servers, putting it into direct competition with long time allies in the data center, such as Dell, HP and IBM.

Whatever rift that forms between Cisco and these server vendors is an opportunity for Cisco’s networking competitors.

In the year since the storage networking company Brocade bought Foundry Networks, it has been leveraging its existing partnerships with leading IT equipment vendors to expand the market for its newly acquired Ethernet switching business. Apparently vendors like IBM and Dell are only too eager to find an alternative networking partner.

Earlier this year IBM announced a major expansion to its OEM relationship with Brocade. Big Blue had been selling IBM-branded storage networking gear from Brocade for several years, but in the new deal it expanded that OEM relationship to include a broad range of former Foundry switches and routers.

And now yesterday Dell announced that it is expanding its own OEM relationship with Brocade, from a storage networking channel to a broad line of Brocade’s Ethernet products.

Dell also announced it would start reselling products from IT automation vendor Scalent Systems. This is all part of an “Efficient Enterprise” offering Dell plans to unload on the market toward the end of 2009. As a result of these new OEM deals, Dell can now offer enterprises servers, storage, networks and IT automation software in one deal, enabling enterprises to buy an integrated data center solution from one vendor. IBM is making a similar move with its OEM agreements and its consulting arm. HP is moving swiftly in this direction, too, but it has the advantage of possessing its own, rapidly growing network equipment division in ProCurve.

IBM exec leaves to head Avaya’s Nortel integration?

IBM veteran exec Mohamad Ali will leave IBM after more than 13 years and join Avaya as a senior vice president of corporate development, focusing on M&As, he told his contacts in a personal email over the weekend.

Ali’s transition to Avaya is especially noteworthy now that Avaya intends to acquire Nortel’s enterprise business.

Ali said he will lead Avaya’s M&A activity as the company angles to gain market share on Cisco in the enterprise communications market, according to Xconomy, a Massachusetts business and technology journal that interviewed him over the weekend. Avaya, Nortel and Cisco have long battled for the top three spots in the Voice over IP market, with Nortel holding ground even amid its bankruptcy proceedings.

There appears to be a clear alignment between Ali’s new role at Avaya and Nortel’s current customer base. Ali said in his email that Avaya offers “an opportunity to participate in and shape a whole new era of intelligent communications for healthcare, financial services, government and other services.” Nortel counts numerous government and healthcare agencies among its largest customers.

Ali led IBM’s worldwide M&A activities and was behind IBM’s 2007 acquisition of Cognos. He also said in his email that he has joined the board of Ember Corp. a Boston-based ZigBee wireless technology company that enables smart meters and building systems for energy efficiency.

Ali did not respond to emails regarding his new role at Avaya.

Cisco replaces GM on Dow Jones

I’m not a big believer in relevance of the Dow Jones Industrial Average as a leading economic indicator, but Cisco’s ascendancy to the 30-company list is certainly significant.  Cisco’s addition came at the expense of bankrupt General Motors, which had been on the Dow since 1925. Only General Electric has been on the list longer.

The move means that the Dow Jones is no longer an “industrial average” per se.  IT companies now make up a large block on the list, with Cisco joining Microsoft, IBM and HP and Intel.  The Dow chooses companies for its list based on their reputation and their ability to generate sustained growth. For a long time, that meant reliable industrial performers like General Electric, 3M and GM. But in the 21st Century, Wall Street has clearly recognized that IT companies may have more potential to deliver wealth to investors than the makers of light bulbs, Scotch tape and pick-up trucks.

Cisco plans to enter 50 new markets: acquisitions inevitable

BusinessWeek reported yesterday that  Cisco is poised to make several acquisitions as it continues to diversify. The magazine noted that Cisco now competes in 30 different markets, many of them courtesy of acquisitions, such as Pure Digital, which gave Cisco a new toehold in the “Flip” video camera market. In an interview with BusinessWeek, Chambers said Cisco will enter 50 new markets within a year.

One of those markets, of course, is blade servers. Cisco announced its new Unified Computing System this spring, putting it in direct competition with companies that it has historically partnered with: IBM, HP and Dell. BusinessWeek noted that IBM alone sells about $3 billion worth of Cisco’s network technology through its consulting services.  Since rumors of Cisco’s move into servers started spreading, IBM has since increased its ties to Cisco’s networking rivals. It has partnered with Juniper on its Stratus cloud computing project and it announced an OEM agreement to sell IBM-branded versions of Brocade’s Ethernet switching and routing gear.

One analyst, Sam Wilson of JMP Securities, told BusinessWeek that the souring relationships between Cisco and the consulting arms of HP and IBM could force Cisco to develop its own consulting services. He said: “If push comes to shove” Cisco could simply buy Accenture, one of the biggest consulting firms on the market.

Cisco doesn’t seem to be shy about making such a sizable acquisition, either. Cisco’s mergers an acquisitions chief Ned Hooper told BusinessWeek that Cisco could easily afford a $10 billion deal right now. It has $33 billion in cash. But Hooper went on to say that Cisco will focus on smaller deals for now.

Aruba is banging out the wireless LAN customer wins

Aruba Networks emails me quite often with wireless LAN customer wins. Either it is signing more customers than other WLAN vendors, or it simply publicizes its wins more often.  Usually I don’t bother to write about this customer news, but a couple of recent announcements have caught my eye.

First there was Aruba’s announcement that Carnegie Mellon University has just completed the deployment of 1,540 802.11n access points across its campus. Aruba said that Carnegie Mellon was particularly attracted to the company’s Adaptive Radio Management (ARM) technology, which simplified access points deployment and maintenance. The school was also attracted to Aruba’s Policy-Enforcement Firewall (PEF), which provides identity-based security, Quality of Service (QoS) control and traffic management.

Meanwhile over in Australia, IBM announced that it had won a contract from the government of New South Wales, to design, deploy and manage wireless LAN infrastructure for 463 secondary schools. IBM will install Aruba technology in all of those schools, providing wireless connectivity to more than 200,000 students and 25,000 teachers. That’s a big contract and a lot of access points.

Juniper and IBM reaffirm alliance in wake of Brocade deal

On the heels of today’s huge news that IBM has signed an OEM agreement with Brocade to sell IBM-branded Brocade (formerly Foundry) switches and routers, Juniper and IBM are reaffirming their ongoing alliance.

I received a press release this morning from Juniper specifically detailing the joint work Juniper and IBM are doing in cloud computing, such as Juniper collaboration with IBM to develop a single data center fabric for cloud computing with its Juniper’s Stratus Project.

Juniper also pointed out that the Brocade OEM agreement is only part of IBM’s larger Dynamic Infrastructure announcement today that highlights a new series of products and services from IBM aimed at helping enterprises build next generation data centers and move into cloud computing. Juniper is a critical participant in IBM’s strategy, Juniper points out..

In the Juniper announcement, IBM vice president for enterprise initiatives Jim Comfort said:

Juniper is an important supplier of networking products. IBM is already a reseller of Juniper’s Ethernet switches and routers and we continue to look for opportunities to expand this relationship to provide increasing choice for our customers and the flexibility to support their dynamic infrastructure needs.