IBM deal steps up attack on Cisco

Brocade Communications Systems is deepening its ties with a powerful ally, IBM, forging a new distribution deal for internet routers and switches at a time when bigger rival Cisco Systems is straining some of its old relationships.

Brocade and IBM are set to announce that IBM will help sell more Brocade products by re-branding them with IBM's own logo and pushing them out through IBM's sales force - a common arrangement among technology companies that gives the smaller one (Brocade) access to better distribution and the bigger one (IBM) access to products it didn't pay to manufacture.

IBM has resold Brocade products - specifically, switches that connect servers and data storage machines - in this way for over a decade.

The announcement is an expansion of that partnership, in which IBM will resell the internet routers and switches that Brocade picked up as part of its $3 billion acquisition last year of Foundry Networks, a small Cisco rival.

In that sense, the announcement is incremental for IBM, which as a one-stop technology shop has to play both sides of the fence when it comes to reselling competitors' products, but is major for Brocade, which is looking to step up its attacks on Cisco, the market leader, and benefits from IBM's reputation.

"That (IBM) brand obviously carries tremendous value," Dave Stevens, Brocade's chief technology officer, said in an interview.

IBM said in a statement that the expansion of the agreement with San Jose, California-based Brocade is about giving customers more choices. Armonk, New York-based IBM said it continues to work with Cisco and that the two companies have a strong relationship.

But after growing into one of Silicon Valley's most prominent companies by selling behind-the-scenes computing products, Cisco is now expanding aggressively, saying in recent weeks that it will start selling servers.

That has opened a new rivalry with longtime partners like Hewlett-Packard Co. and IBM and shows how the landscape for back-end technologies is changing fast as companies hunt for growth in their allies' backyards.

Other examples are Oracle's proposed $7.4 billion acquisition of Sun Microsystems (a shot at both HP and IBM) and HP's $13.9 billion takeover of Electronic Data Systems (a bid to better challenge IBM in services). HP is also getting more aggressive about pushing its own networking products that compete with Cisco.

IBM stopped making its own routers and switches in 1999 when the company sold that intellectual property to Cisco.