Readers react to Cisco-IBM deal

(09/07/99) - IB's announcement last week that it was selling its routing and switching patents to arch rival Cisco Systems had online readers of Computerworld's sister publication in the US, Network World, weighing in with their opinions.

One reader says "after the $US2 billion acquisition of Xylan by Alcatel, this seems a logical step", much more so than wasting nearly $7 billion on Cerent, a recent Cisco purchase. "IBM will offer Cisco much-needed credibility and penetration with true-blue mainframe data centre accounts." The reader goes on to say that with "one fell swoop" Cisco has scooped up some more market share "and in the emerging network commodity market this will be the winning factor".

Some commentators felt the deal was inevitable because of Big Blue's condition. "IBM suffers from a problem that is similar in other large technical companies," one reader says. "That problem is the internal politico-management structure that just cannot rise above the old way of doing things. This results in poorer products and performance. This has been seen time and time again in the past 10 to 15 years, and that is why the likes of Cisco and other 'techie' start-up companies have been so successful."

He goes on: "The old-guard management style is to fight over internal product ownership among multiple divisions and be visible in the eyes of upper management. The political ramblings force delays for crucial product decisions and can even stagnate product development. Worse is the belief that the competition is just not real. For all the things that IBM said it has done to change into a lean mean tech machine, it is obvious it has not done enough."

Another reader is convinced IBM's struggle with Cisco was hopeless all along, and this deal with Cisco will prove a boost to Big Blue: "I strongly believe that IBM was never going to be able to fully compete in the IP networking market. Unless there is a definitive agreement in place to sell only Cisco equipment, IBM sales folks will be free to sell any networking vendor's product. And they won't have to worry about shrinking margins, either!"

There are also predictions. One reader who spent years in IBM's network business partners program states: "The rumour always making the rounds was that IBM was going to sell [NHD] off and concentrate on licensing its Prizma ATM switch chip to OEM companies."Reader Steve Evans continues: " Cisco now owns the rights to IBM's latest Data Link Switching code for SNA in IP encapsulation. Since the IBM router code is far superior to Cisco's, it wouldn't surprise me in the slightest if Cisco ports the code directly [to its own products]. You'll have new Cisco code based on a stable, well-developed code core."

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