IBM, Moving Into Cloud Computing, Beefs Up Networking Offering
July 22 2009 - 2:45PM
Dow Jones News
International Business Machines Corp. (IBM) said Wednesday it
plans to start selling networking products made by Juniper Networks
Inc. (JNPR) in a move that underscores the company's efforts to
broaden its technology portfolio as it pushes into cloud computing
services.
The deal, in which IBM will sell products from Sunnyvale,
Calif.-based Juniper under its own name, builds on similar
relationships IBM has with other networking companies. The Armonk,
N.Y.-based technology giant already resells networking equipment
from Cisco Systems Inc. (CSCO), the world's largest networking
equipment company and Brocade Communication Systems Inc. (BRCD),
another networking product maker.
Cisco, Juniper and Brocade all make routers and switches, used
to "network" computers together, as well as direct information and
data over the Internet.
IBM's deal comes amid growing interest in "cloud computing," the
concept of selling computing services that are accessed online and
paid for on a metered basis. Cloud computing is shaking up the
technology sector - Microsoft Corp. (MSFT) and Google Inc. (GOOG)
have launched products to establish themselves in the field - and
several big technology vendors are seeking to augment their
portfolios with products which can better serve the cloud computing
platform.
IBM has traditionally resold some networking equipment made by
companies such as Juniper and Cisco, through its massive technology
services unit. But with many customers' networking infrastructure
ill-equipped for cloud computing, it needs more flexibility in the
products it can offer, Robert Whiteley, a research vice president
at Forrester Research, said.
"Networking is the big bottleneck in cloud computing," Whiteley
said. "To be able to offer breadth and depth in services, IBM needs
some networking tools in its own portfolio."
Wednesday afternoon, IBM shares were down 1.4% at $115.38.
IBM isn't alone. In recent months, several big technology
vendors have moved into adjacent product areas either through
organic development or acquisitions - moves that could change the
market share landscape and rules of engagement.
In particular, Hewlett-Packard Co. (HPQ), IBM's biggest rival in
the hardware and IT services market, has been beefing up its
ProCurve networking division and is starting to compete more
aggressively with Cisco and others.
Cisco, for its part, recently announced its intention to start
making servers, bringing it ultimately into more direct competition
with IBM, while Oracle Corp. (ORCL), the database and software
giant, also recently moved into the hardware business through its
acquisition of Sun Microsystems Inc.
Forrester's Whiteley said cloud computing, which allows
customers more flexibility in the technology kit they buy, is
forcing vendors to diversify in order to "grab more wallet
share."
-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455;
jessica.hodgson@dowjones.com