Monday, September 27, 2010

IBM's Acquisition of Blade Network Technologies a Smart Move

By David Gross

Rumors were flying last week that IBM (IBM) was about to buy Brocade (BRCD). Well, that still hasn't happened, but the large technology supplier is going to make a much more sensible deal - acquiring top-of-rack switch maker Blade Network Technologies.

Cisco's (CSCO) proprietary VLAN protocols have far less of an impact in the top-of-rack segment than they do elsewhere, which has made this small portion of the Ethernet market more friendly to alternate suppliers than the traditional corporate LAN market. Moreover, many vendors missed out on this segment because they were so focused on building massive carrier Ethernet boxes with overcooked operating systems, while Blade and Arista have kept things simple and straight forward by focusing on latency, not accommodating massive routing tables.

In addition to an existing sales relationship with IBM, Blade has an OEM arrangement with Juniper (JNPR), who was an investor in the company. Financial terms of the acquisition have not been disclosed.

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