Blade Network Technologies, the private equity-backed blade networking spinout from now-bankrupt Nortel, has rebranded its blade switches, dumping the old Nortel moniker.
And to battle Cisco Systems, coming into the blade server space with its California blade servers featuring integrated and virtualized switching, BNT has licensed the entire patent portfolio from switch-partner IBM while IBM has licensed BNT's considerably smaller portfolio.
Both IBM and HP have been selling BNT's blade switches for many years, and IBM has been selling them under the Nortel name. But starting this week, IBM has slapped the BNT brand on them when they are sold in conjunction with its BladeCenter blades.
Hewlett-Packard also resells some BNT switches, and does so under its BladeSystem brand already. Niche server maker Verari Systems and Japanese server giant NEC also resell BNT's blade switches. NEC only does so in its home market. Vikram Mehta, BNT president and chief executive, the company is working on another half dozen OEM agreements that it hopes to announce soon.
But for now, the IBM and HP business is pretty good, since these two vendors account for the bulk of blade server sales and shipments and about half of the blades that IBM and HP ship are linked to the outside world through a BNT switch.
BNT doesn't report shipment and revenue figures since it is privately held, Mehta said it has shipped nearly six million switch ports and all of them are deployed in data centers, not branch offices and departments. Unit shipments for blade switches grew by 54 per cent in 2008, giving BNT a 48 per cent share of the blade switch space - and twice the market share of Cisco in blades.
You can see one reason why Cisco wants to get into blade servers: market share. According to the latest figures from Dell'Oro Group for the fourth quarter of 2008, Cisco shipped 9.27 million Gigabit Ethernet ports for a 5.6 per cent share of the total market, compared to BNT's 461,700 ports. HP shipped 1.42 million ports, 3Com shipped 1.04 million ports, and Nortel shipped 810,500 ports according to Dell'Oro.
All of those vendors ports except BNT's spanned the entire IT spectrum, not just blades and not just data center deployments. Clearly Cisco likes having dominant market share, which it most certainly does not have in blade switches.
Cisco's share of the emerging 10 Gigabit Ethernet market is also impressive, with Dell'Oro saying Cisco pumped out 89,400 ports for a 55.1 per cent share of the market, followed by HP with 13,300 ports and BNT with 12,900 ports.
Given that Cisco wants to be in the blade center space - and wants to sell a complete system that shuts out not just IBM and HP, but also BNT - you can see why BNT would want to shell out some dough to get access to Big Blue's patent portfolio, which stands at more than 40,000 patents. The deal is actually a cross-licensing arrangement with money changing hands, but Mehta won't say how much dough is involved.
IBM is getting access to a couple dozen patents that BNT has acquired since being spun out of Nortel in 2006, Incidentally, BNT did not have access to the Nortel patent portfolio, which was strange. You would have thought that the private equity guys would kick in some more money three years ago to get access to those patents, which have to be as useful as some of the things IBM has done.
Exactly what BNT will do with the patents is not clear. All Mehta would say is BNT was combing through the patents for anything that would help it "do switching for cloud and virtual computing environments without the kind of vendor lock in that Cisco is proposing" with the California Unified Computing System.
As for its prospects against a determined Cisco, Mehta is undaunted. "Our position has only been strengthened now that Cisco has gone on the warpath with IBM and HP," he said.
We'll see. ®