IBM strikes OEM deal to resell Juniper Ethernet products

Juniper and IBM, as expected, have entered into an OEM arrangement under which IBM will resell Juniper Ethernet switches and routers to data center customers.

The agreement allows IBM's System & Technology Group to brand, label and sell series Ethernet switches and MX series Ethernet services routers. Terms of the deal were not disclosed.

The deal reflects a broadening of the longstanding relationship between Juniper and IBM. In 2007, IBM's Global Technology Services group agreed to resell Juniper's product portfolio, including routing, switching and security platforms. This reseller agreement will continue, the companies said.

For the past year, IBM and Juniper have been working together on the Stratus Project, Juniper's initiative to create a single data center fabric for converged and virtualized data center environments. The companies have collaborated on a technology demonstration of extending private data center clouds; partnered on customer engagements in IBM's 10 global Cloud Labs; and on moving compute workloads between private and publicly managed cloud environments.

The companies are also jointly researching cloud computing security models to determine how customers might mitigate attacks on corporate data and computer systems.

IBM also offers its Managed Maintenance Services on the Juniper product portfolio. IBM and Juniper have also been working on joint technology solutions, standards development, network management and managed security services.

IBM signed an OEM agreement with Brocade earlier this year to resell Brocade's Foundry switches. While it appears the Juniper deal overlaps with that, Juniper says the Brocade switches will be targeted by IBM at campus and workgroup environments while Juniper's products will be focused squarely on the data center.

An IBM spokesman says there is no overlap or conflict with the Brocade deal because the company's data center initiative is to offer “best-of-breed networking technology from the leading vendors.”

An OEM arrangement represents a deeper commitment than just reselling product, according to Rob Whiteley an analyst at Forrester Research.

“Having an IBM-branded product on the sales sheet will be easier for IBM to work into its solution selling. Also, as IBM works to position itself as a leader in the cloud computing market it needs to be able to tackle network infrastructure as part of both public and private cloud architectures.”

Whiteley says the deal appears to pose a conflict with the IBM/Brocade OEM agreement for Foundry switches and routers. But it's about offering choices, he says.

“It's not uncommon for IBM to supply multiple networking options,” Whiteley says. “Their goal is to provide choice and when customers demand a deeper integration or partnership, they'll supply it. I see this as a bigger move for IBM to diversify its networking portfolio.”

That Brocade deal was viewed as IBM's retaliation for Cisco entering the data center blade server market, long the stronghold of partners IBM and HP. But IBM recently announced that it would OEM Cisco's Nexus 5000 data center switch, which indicates that relations between the two may not be as bad as suggested.

But analysts acknowledge that so many OEM sources for switches may confuse customers. But they indicate that IBM is becoming more of an integrator of products that suit the best interests of its customers – and itself – while gradually placing its eggs in other networking baskets besides Cisco's.

“My read on what is happening is that IBM is returning to becoming a true integrator and will more actively look out for the best interests of their customers as well as their own best interests,” says Mark Fabbi of Gartner. “Having some alternatives will aid in this. This will result in a rebalancing of their past thinking which basically equated networking with Cisco. In IBM's case, when they are in control of an account — for example a large data center consolidation project — you will see them select what they feel is the best solution for the customer and their own financial position and it won't always be Cisco.”

Fabbi believes IBM will continue to deal with Cisco – “it's too big to walk away from” – but will gradually reshape its business to where Cisco will not be “the de facto only choice” for networking.

And extending its current resale arrangement with Juniper into an OEM deal will help demonstrate IBM's commitment to networking – and might result in better margins, Fabbi says.

“It represents a closer arrangement between the two companies,” he says. “For IBM, it likely results in a better financial arrangement so it can help their ability to increase margin. There could also be some reciprocal commitments that are attractive to Juniper.”

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