IBM Turns Back on Juniper to Buy Blade Networks


Updated: IBM (s ibm) today said it would buy Blade Networks, a company that makes networking gear that can help vendors combine computing and networking in a box that resembles Cisco’s (s csco) unified computing system. IBM plans to pay an undisclosed amount for Blade, which is four-and-a-half years old, reported $79 million in revenue for 2009, and planned for revenue in excess of $100 million for its fiscal year, which ends in October. Update: Sources are saying that IBM paid $400 million for Blade.

The deal is also a bit of bad news for Juniper (s jnpr), the networking and switch maker that had a deepening partnership with IBM in the wake of Cisco launching its competitive entry into the server market, thereby alienating its former partners. Since that move, HP (s hpq) has made the somewhat dubious purchase of 3COM, and Dell (s dell) has signed several partnerships with any networking vendor that has a port, including some with Brocade (s brcd), Juniper and Mellanox (s mlnx).

However, Juniper released a statement noting that the deal isn’t the blow it may first appear, since Juniper is an investor in Blade. Indeed, the networking company participated in a $10 million funding round last year that gave Blade a $230 million valuation. With the deal, IBM gets a major player for the converged networking fabric, and the first with 10-Gigabit Ethernet capability and support. Blade has hundreds of customers as well as several hardware OEMs, from Netezza (another IBM buy, actually) to SGI using its switches. IBM’s press release paints the future pretty clearly:

Over the past 18 months, IBM has expanded its core networking business through relationships with leading networking companies. IBM plans to continue providing clients a choice in core networking solutions through these important, ongoing relationships while using BLADE’s industry standard-based system networking technology to create systems that are efficient, easy to manage and simple to deploy. Today, networks are made up of different layers, each one designed to pass information up and down to the next layer as data is processed. BLADE’s switches will be brought closer to IBM systems and then pass information to the core networking layer, optimizing systems performance.

In short, Juniper isn’t totally screwed, but as the data center embraces the convergence of networking and compute (in the cloud and with webscale companies), IBM will use Blade to offer its own version of Cisco’s UCS hardware, leaving Juniper and its other partners taking care of the laggards that prefer to keep their networking and computing on separate gear. It’s a large market for now, but it’s not where the future is heading. Blade spun out of Nortel in Feb. 2006 and raised $25 million in venture capital at that point. When I last spoke to Blade President and CEO Vikram Mehta in March, the company had 9,500 customers and was already working with IBM.

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Bob Sacamanno

Wow, Juniper folks out in full force doing damage control. Your article was dead on, Stacey, and clearly hit a nerve.

Ray Mota

Hi Stacey,

I’ve read many of your blogs, and find some of your analysis of vendors and products interesting,
but I must say I was surprised by the inaccuracy of your article IBM Turns Back on Juniper to
Buy Blade Networks. To say IBM has turned its back on Juniper after seeing firsthand how well
the strategic alliances are working between them is grossly misleading. There is no foundation
or validation by a respected third-party analyst to support your position. At the very least you
should have quoted an analyst that covers this space.

I would like to discuss this blog with you if you are willing. Please contact me, and I’ll provide
my views and also recommend another analyst that cover this space so that you can get a more
comprehensive view as to what is happening in the industry and exactly what implications this
buyout has for the vendors.


Ray Mota

Managing Partner

ACG Research

+1 408-200-0967

Elizabeth King


The headline of your article is simply incorrect.

As the executive responsible for leading Juniper’s global alliance with IBM, I can assure you that IBM and Juniper enjoy a healthy, growing and multi-faceted alliance. We deliver a wide range of technology solutions together, have collaborated on product development and strategic initiatives such as Project Stratus (our next generation data center fabric) for many years, and will continue to expand our relationship with IBM through our distribution and OEM agreements.

IBM’s acquisition of Blade is positive for Juniper, and we expect that our business and joint opportunities with IBM will only continue to deepen and grow as a result. I could not be more excited about the prospects to come for our respective companies as we continue to deliver the New Network to our customers worldwide.

Elizabeth King
Vice President, IBM Alliance, Global
Juniper Networks

Abner Germanow - Juniper Networks

Hi Stacy,

There is certainly a ton of innovation occurring in the challenge of networking a rack of servers efficiently to deal with dense compute platforms and virtualized environments. Cisco’s UCS, HP’s virtual connect, Oracle’s Exadata and a few others that have not hit the market yet are all examples of this trend. Most would argue that is a larger change in server architectures, while the core of the datacenter market hooking all these dense compute platforms together remains largely a separate and different challenge (excepting security and management coordination)

The big question is how fast will Blade’s technology appear in IBM’s next generation compute platforms? We can’t wait to connect them together :-)


Derrick Harris

If IBM is still interested in Juniper, it might be at a higher level. BLADE is pretty focused on data center switching, but Juniper does a whole lot more.

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