IBM Acquires BLADE Network Technologies

Blade-RackSG8000

A look at the BLADE Network Technologies RackSwitch G8000.

IBM has entered into a definitive agreement to acquire BLADE Network Technologies, which makes Ethernet switching hardware and software for data centers. The deal continues the realignment of planets in the IT industry as largest vendors position themselves for the Battle for the Data Center.

Financial terms were not disclosed. BLADE Network Technologies is privately held, but said last year that a series B financing round valued the company at $230 million. The acquisition is anticipated to close in the fourth quarter of 2010, the companies said.

BLADE Network Technologies specializes in Ethernet switches for blade servers, and is also a player in the market for 10 Gigabit Ethernet switches. The company was formed in 2002 as a division of Nortel Networks, but was spun off by founder Vikram Mehta in 2006 with the backing of Garnett & Helfrich. NEC and Juniper came on as investors in 2009.

'Thousands' of Joint Clients
IBM and BLADE have worked together since 2002, and have "thousands of joint clients," the companies said, adding that more that 50 percent of IBM System x BladeCenters currently attach to or use BLADE products.

"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. "For example, faster data transport enables faster decisions important for analytics workloads. BLADE will increase IBM's System Networking development, sales, support, skills and awareness and help IBM build smarter systems that are optimized for client requirements."

Response to Cisco, HP Moves
Over the past 18 months, IBM has expanded its core networking business through relationships with leading networking companies, including Brocade and Juniper. Those moves were seen as strategic responses to the decision by networking giant Cisco Systems (CSCO) to introduce a blade server, as well as the expansion of HP"s networking ambitions, reflected in its acquisition of 3Com.

BLADE provides software that helps address the massive virtualization requirements of cloud computing environments. BLADE software allows servers to more closely integrate with the network so that clients can deploy thousands of virtual machines to run large application workloads in the cloud and reduce complexity through simplified management.

"BLADE views this as a great opportunity to continue working with the ecosystem of technology providers that have helped make our company successful while allowing our technology to become a more central part of the data center," said Vikram Mehta, CEO of BLADE. "Our very talented and hard working people are focused on building innovative system networking solutions, making BLADE an ideal fit to help IBM execute on its strategy to build smarter systems that deliver more value to clients around the world."

UPDATE: This afternoon Juniper issued a statement on the IBM-BLADE deal. "This deal is beneficial for Juniper," the company said. "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. All three companies are aligned in our commitment to addressing customers' most challenging connectivity needs for next-generation data center networks."