IBM challenges partner Cisco
IBM is adding a new chapter to the high-tech industry's long history of “coopetition.” — Big Blue is expected to announce on Tuesday that it plans to resell Ethernet switching equipment from Brocade, a much smaller rival to Cisco Systems.
Context & Ripple Effects
The expected Brocade resale deal extends a playbook IBM has been running all year: in February it signed a wide-ranging cloud partnership with Amazon Web Services even as it courted enterprise buyers itself, and it spent late 2008 pushing collaboration software like Bluehouse onto partners' turf. The rumored Sun Microsystems acquisition — reported at nearly $7 billion but still unconfirmed — points the same direction: Big Blue assembling a full stack rather than staying in anyone's lane.
Cisco knows this game too — its own history of being simultaneously a Microsoft ally and rival was mapped out back in 2007 coverage of 'cozy competitors'. What changes now is direction: with $29.5 billion in confirmed cash reserves, Cisco has been the one buying (Flip Video maker Pure Digital in March); an IBM sales force carrying Brocade switches puts a competitor inside Cisco's installed base instead.
First-order effects
- Brocade gains access to IBM's enterprise account relationships for Ethernet switching, giving the smaller vendor a channel into customers it could not reach alone.
- Cisco suddenly competes against its own partner: IBM, which resells Cisco gear alongside its servers and services, would be offering an alternative switch brand in the same deals.
Second-order effects
- With $29.5 billion in cash and rumors swirling about acquisitions of NetApp or others (unconfirmed), Cisco has the balance sheet to answer through M&A or deeper bundling of switching with its collaboration and video pushes.
- IBM's move raises the stakes on its rumored Sun Microsystems deal — pairing Brocade networking with Sun servers under one roof would make Big Blue a full-line alternative to both Cisco and HP-style converged offerings.
Third-order effects
- If the pattern holds, the data-center sale becomes a stack-versus-stack contest where alliance membership matters more than any single box — forcing every major vendor to decide which rivals' components it will carry and which it must neutralize.
- Regulators and procurement teams eventually face the flip side of coopetition: fewer genuinely independent equipment makers as giants absorb or channel smaller specialists like Brocade.
The trend: Enterprise hardware is consolidating into bundled stacks sold by services-led giants, with former partners like IBM and Cisco flipping between ally and competitor depending on the deal.