IBM buys into data center switching with Blade acquisition

IBM acquires top-of-rack and blade specialist Blade Network Technologies, heightening competition with rivals HP, Dell, and Cisco

IBM is buying privately held data center switching company Blade Network Technologies to expand its data center portfolio into networking and heighten competition with rivals HP, Dell, and Cisco.

Financial terms of the deal, announced Monday, were not disclosed. Investors in Blade Network include Garnett & Helfrich Capital, NEC, and Juniper Networks.

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Tech M&A deals of 2010

Blade Network specializes in blade and top-of-rack switches that connect racks of servers to other data center resources, such as storage arrays. IBM is an OEM reseller of Blade's switches and has been aligned with the company since 2002. IBM says 50 percent of its System x BladeCenter server racks currently attach to or use Blade switches.

Blade Network is the No. 2 vendor of 10Gbps Ethernet blade switches for the data center, behind HP and ahead of Cisco, according to Dell'Oro Group. Of the 762,000 fixed 10G Ethernet ports that shipped in the second quarter, 46 percent were from top-of-rack switches and 31 percent were from blade switches, Dell’Oro notes.

Blade Network had a 0.9 percent share of the $16 billion overall Ethernet switching market in 2009, according to Dell'’Oro.

Gartner also placed Blade Network No. 2 in terms of port shipments of data center Ethernet switches in 2009, with a 17.4 percent share of the 10 million ports shipped. Cisco was No. 1 in both port shipments (53 percent) and revenue share (48 percent of the $1.9 billion market) in data center Ethernet in 2009, according to Gartner.

HP was No. 2 in revenue and No. 4 in port shipments. IBM was a non-player, according to the Gartner data.

Blade Network changes that.

"Blade will help IBM better integrate networks with its systems, optimizing them for workloads that require high-speed and low-latency performance such as cloud computing and business analytics," said Brian Truskowski, General Manager, IBM System Storage and Networking, in a statement.

Blade Network also provides software to virtualize and manage cloud computing and other workloads. Its customers include more than half of the companies on the Fortune 500 across 26 industry verticals, including automotive, telecom services, education, government, healthcare, defense, and finance, according to IBM.

The acquisition is expected to close in the fourth quarter of 2010.

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This story, "IBM buys into data center switching with Blade acquisition" was originally published by Network World.