Nishan Systems Inks IBM Deal

Nishan Systems, a startup focusing on IP-based storage area networking (SAN) technology, this week announced that it's signed an agreement with IBM Global Services, the consulting and integration arm of IBM Corp. (NYSE: IBM).

Big deal? Yes and no. A reseller agreement with an organization as large and far-reaching as IBM Global Services is always a good thing for a startup looking for customers. But the deal is not exclusive -- to either company -- and IBM stopped short of endorsing Nishan's proprietary IP SAN approach, describing it simply as another potential technology for customers.

The agreement calls for IBM Global Services to use Nishan's products in its storage network integration projects worldwide. The size of the agreement is unknown; the term of the contract is two years, renewable if all goes well.

IBM Global Services also has formal resale and marketing agreements with a slew of other makers of storage networking products (in addition to IBM itself), including Brocade Communications Systems Inc. (Nasdaq: BRCD), Compaq Computer Corp. (NYSE: CPQ), and McData Corp. (Nasdaq: MCDT).

IBM Global Services also has a resale agreement with Cisco Systems Inc. (Nasdaq: CSCO), which could be significant as that vendor's Andiamo Systems Inc. spinoff unfolds its SAN products (see Cisco’s Secret SAN Strategies Revealed).

Despite the lack of exclusivity, the announcement marks significant progress for the startup. First, IBM Global Services is an enormous operation: It took in about $33 billion for 2000 and accounts for about 40 percent of all of IBM's revenues. And storage is a priority: "We don't break out specific numbers, but a very large part of our business is focused on storage services," says Sam Khanna, VP of alliances at IBM Global Services. Getting in on this action is bound to be a rich windfall for a startup like Nishan.

The agreement's also a vote of confidence in Nishan's approach to storage networking. While Nishan offers interfaces to Fibre Channel and SCSI in its products, it uses its own proprietary technique to convert these protocols to gigabit Ethernet packets. Nishan's been working to get its approach -- which it's dubbed "storage over IP" or SoIP -- approved by the Internet Engineering Task Force (IETF) (see IP Storage Spec Shapes Up).

Such issues raise questions about IP's role in SANs in the future. Until now, Fibre Channel and SCSI have been the key SAN protocols. But IBM clearly wants to hedge its bets. "We selected Nishan Systems because their products support Fibre Channel as well as IP," says Khanna. "We think this is a very interesting value proposition, giving customers more of a choice."

What's not clear is just how many customers are ready to use IP networks for storage applications. According to Khanna, the market is still forming. For this reason, IBM Global Services stops short of globally endorsing either SAN approach. The point, he asserts, is to have as many deals in place as possible, so that as trends emerge IBM will be prepared to cash in.

The primary market for IP-based SANs is expected to be enterprises. The degree to which carriers may be interested isn't yet apparent.

Still, Nishan says the appeal of IP SANs is bound to affect carriers. "Ethernet LECs such as [Yipes Communications Inc.] and [Telseon] would stand to benefit greatly by our ability to help enterprises generate gigabit Ethernet storage traffic," says Randy Fardal, VP of marketing at Nishan. As enterprises generate huge amounts of this traffic, Fardal maintains, they're likely turn to carriers like these to deliver gigabit Ethernet services over their corporate nets.

-- Mary Jander, Senior Editor, Light Reading http://www.lightreading.com