Today Brocade announced that IBM will rebrand and sell Brocade’s enterprise IP networking portfolio, a move that will strengthen both Brocade and IBM as they compete for market share in the increasingly competitive data center infrastructure space. For Brocade, IBM provides an OEM channel for distribution of its existing and future IP networking switches . With IBM’s Q1 09 server revenues reaching an estimated $2.1 billion (Q1 09 IBM earnings presentation), the opportunity for Brocade is big. This agreement speaks to the strength of Brocade’s OEM program (and 12-year relationship with IBM) and is an agreement that diversifies the channels through which products utilizing IP networking expertise obtained from Foundry will now be distributed. For IBM, the ability to sell Brocade’s NetIron MLX and CES 2000 series products as well as FastIron GS Series and SuperX family will provide Enterprise accounts IBM branded, high performance and scalable switches in addition to its servers, management suite, and global implementation services. This move positions it favorably against HP and Cisco as it is now able to offer a full breath of products and more end-to- end solutions.
Sr. VP of Sales at Brocade, Ian Whiting, indicated that Phase I products (listed above) will be generally available in May. Other products, including Brocade’s Layer 4-7 products and products to be announced at Interop in Las Vegas, will be included in Phase II of the relationship (which is targeted for the second half of 2009. He also indicated that the Evergreen agreement is not exclusive and pointed out that IBM’s strategy has been to offer its customers “choice” and most likely would continue to do so. Currently, IBM resells Cisco, Juniper and Force10 switches. Brocade believes it was the best option as an OEM partner for IBM since Cisco is now a competitor with its entry in the server space and neither Juniper, whose success has traditionally been in the WAN and telecom space, or Force10 offers the breadth, scalability or experience in taking a complex product through the process of “baking it in” with a partner’s product line. Additionally, since the agreement does not limit IBM from selling outside the Enterprise space, IBM could potentially target its branded products into the service provider space although Brocade believes its goal is to leverage and expand in data centers and campus LANs where it has traditionally been successful.
The agreement provides global reach for IBM and will first be focused primarily on North America and European regions, but plans include APAC and Japan as well. To help ensure the success for both Brocade and IBM, Brocade is investing significant capital and people resources into helping IBM qualify and move prospects through the sales cycle over the next 12 months.
In summary, the key message here is that Brocade realizes that in order to continue to grow it needs a strong services organization like IBM that can bundle Brocade’s value proposition into its overall business solution and help it expand its customer reach, which should reduce customer acquisition costs for Brocade.
Tags: data center, ethernet switch, Katie Trippet, Brocade, IBM, HP, Juniper, Force10, Cisco, Foundry, IP networking, NetIron, FastIron, SuperX, Layer 4-7, campus LANs, enterprise switching