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Juniper Likes IBM/Blade

Craig Matsumoto
9/27/2010

5:30 PM -- IBM Corp. (NYSE: IBM) said today that it's agreed to buy Blade Network Technologies Inc. for a price that Barron's pegs at about $400 million. That's compared with a $230 million valuation attributed to Blade's Series B funding in September. (See IBM to Acquire Blade and Blade Secures Series B.)

By owning Blade, IBM would have its own top-of-rack switch. That possibly gives it one less reason to resell Brocade Communications Systems Inc. (Nasdaq: BRCD) or Juniper Networks Inc. (NYSE: JNPR) switches.

So, Juniper responded this morning with the usual statement about how the event should be considered a good thing: "As an investor in Blade Network Technologies and a strategic alliance partner with IBM, this will enable us to collaborate more closely when our products and services are deployed together."

That statement might not be as disingenuous as these statements tend to be. IBM uses Blade blades heavily, so it's essentially bringing a technology in-house. That doesn't necessarily mean IBM wants to get into the switch business.

More likely, it's a step towards IBM distancing itself from Cisco Systems Inc. (Nasdaq: CSCO), which has become more of a competitor thanks to the Universal Computing System (See Cisco Dreams of Data Center Unity.)

So, Juniper's story checks out for now. It doesn't seem like IBM will come guns-blazing into the top-of-rack switch market.

— Craig Matsumoto, West Coast Editor, Light Reading

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