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IBM's alleged SDN business sale: Pricing exercise or a new direction?

Gina Narcisi

IBM is reportedly shopping around its young SDN product line, with an alleged asking price of $1 billion.

Re/code.net claimed the company has approached several networking giants -- including Dell, HP, Cisco, Juniper and Fujitsu -- in order to explore interest in the sale of its IBM SDN business. An IBM spokesperson declined to comment on the speculation.

IBM has already shed its network hardware business as part of the sale of its x86 server business to Lenovo for $2.3 billion last week. IBM's SDN business unit is purely a software business today, comprising its Software Defined Network for Virtual Environments.

The rumors of an IBM SDN sale could be a case of the company reassessing its position in this space -- possibly as a "pricing exercise," or to determine if SDN software is a direction it should be pursuing, said Eric Hanselman, chief analyst with New York-based 451 Research.

"I would be surprised if IBM intends to sell the software assets in its SDN portfolio," said Brad Casemore, research director at Framingham, Mass.-based IDC. "I believe the company is committed to SDN as an integral component of its software-defined environments strategy.  IBM sees itself as being well placed to deliver SDN with both overlay-based network virtualization and OpenFlow networking, accommodating both virtualized and physical workloads."

Does potential sale of the IBM SDN business point to a new direction for IBM?

IBM is in the process of reinventing itself, and is trying to determine whether maintaining the assets of an SDN business is worthwhile, Hanselman said. "For IBM, it will be a question of whether or not it makes sense to retain those product capabilities, or to move them outside and use those resources to be able to do other things -- like push its cloud business better," he said.

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The company still has its own software for managing cloud orchestration, and IBM's SDN technology is a natural fit as the networking piece in IBM's SmartCloud Orchestrator cloud management platform, Hanselman said. "If IBM is working on cloud orchestration for a client, having all of the networking components could help them differentiate," he said. But the selling in the SDN market may require more resources than IBM may want to commit, given that it would have to compete with vendors like VMware and Cisco. "IBM might also have a strategy in mind where they don't have to put up the continued research and development investment that keeping SDN competitive requires," Hanselman said.

What does a potential IBM SDN sale mean for OpenDaylight?

IBM is a leading contributor to the OpenDaylight Project, an open source SDN software project, but Hanselman said an IBM SDN sale wouldn't affect OpenDaylight significantly. Vendors such as Cisco and Red Hat are contributing more to the project, and other participants would pick up the slack, Hanselman said.

As long as IBM makes appropriate patents accessible to OpenDaylight, it wouldn't matter if another company bought the SDN business. "IBM still has a prominent role in OpenDaylight, and I don't see that changing in the foreseeable future," IDC's Casemore said.

Let us know what you think about the story; email: Gina Narcisi, news writerand follow @GeeNarcisi on Twitter.

Related Topics: SDN companies, VIEW ALL TOPICS

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