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To: PJ Strifas who wrote (27997)9/4/1999 11:27:00 PM
From: PJ Strifas  Read Replies (2) | Respond to of 42771
As I was catching up on recent news and email (been a busy week) this article is a real interesting one. This makes the 3rd company (or part of one) that CSCO as bought out in the last month.

Makes for interesting dynamics:

IBM has all but thrown in the towel on its Networking Hardware Division

By Marc Songini
Network World Fusion, 08/31/99

RESEARCH TRIANGLE PARK, N.C. - In a surprise move, IBM today announced a far-reaching product, service and support agreement with long-time archrival Cisco that takes Big Blue out of the routing and switching marketplace.

In a joint release, Cisco says it will be acquiring IBM Networking Hardware Division's portfolio of switching and routing patents for an undisclosed sum. IBM says it is providing "a smooth transition for customers to implement Cisco network products."

For its part, IBM says it will provide ongoing support of existing routing and switching implementations and will continue to support Systems Network Architecture products such as front-end processors as well as Token Ring and Ethernet adapters. Beyond that, IBM will no longer make router or switching products.

IBM Global Services and Cisco also plan to expand their existing relationship to enable e-business for their customers. As part of the agreement, Cisco will buy some $2 billion of IBM technology over then next five years, which will probably include IBM network chips and other OEM components.

The move may come as a surprise to some industry observers, as IBM over the past two years has worked diligently to offer a complete lineup of Ethernet, ATM and IP hardware. IBM was even starting to gain market share. So now, while NHD will continue to improve and develop its front-end processors and other SNA gear, its role in the market will continue to shrivel as the industry migrates to Ethernet and IP.

On the other hand, according to one analyst, IBM's move makes perfect sense as the entire network hardware industry becomes commoditized. It's the bottom line with IBM, says Frank Dzubeck, president of Communications Network Architects, a Washington, D.C. consultancy. "IBM's looking at everything like a margin. Margins are king." Dzubeck says this move is probably "a harbinger of the future at IBM" with the PC division being slated for phaseout next.