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Dell buys Force 10 Networks

Storm winds to leave Brocade out in the cold?

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Dell is buying Ethernet networking supplier Force 10 Networks for an unrevealed sum, getting the networking capability needed to build a complete in-house converged IT stack of servers, storage and networking.

Force 10 Networks is a privately owned supplier with nearly $200m in annual revenues and operating on some 60 countries. Some 80 per cent of its revenues come from North America. It has an Open Cloud Networking technology and recently announced a 40Gbit/s Top-of-rack Ethernet switch and a 40Gbit/s line card for its ExaScale core switch. The company also supplies carrier transport products and services.

Force 10 has more than 1,300 customers, including many Fortune 100 businesses and six of the world's top 10 supercomputer clusters. It has been building its business as customers upgrade from 1Gbit/s Ethernet to 10 gig, and now it is positioning itself to supply them with 40 gig product.

It announced its intention to have an IPO last March, wanting to raise $143.8m. The filed papers revealed that it was not yet profitable.

Converged IT stack Lego blocks

Dell has developed its own servers from its original PC products and then diversified into services by buying Perot Data Systems, and then storage. First it bought EqualLogic for iSCSI SANs, and then Compellent for Fibre Channel SANs with highly granular automatic data placement across storage tiers. It also bought Exanet assets for scale-out NAS, and Ocarina for file and image-aware compression.

Up until now it has been selling networking products sourced from Brocade and Cisco, and there have been rumours that it would buy Brocade. The rationale for Dell needing its own networking capability is that enterprises and cloud service providers are presumed to want to buy complete stacks of IT gear. That is an integrated stack of servers, storage, and networking, in which the components are engineered and integrated to work together and deliver more cost-effective resources for the data centres that house them and run applications.

The leading proponents of this approach are Oracle, the VCE coalition of VMware, Cisco and EMC, and HP. This latter company has its own servers, a line of storage products, including the acquired 3PAR enterprise SAN, Ibrix scale-out NAS, and LeftHand Networks iSCSI SAN, and its ProCurve networking business.

Converged IT stack approaches

The three approaches to converged IT stacks are to own all the pieces yourself, like HP and Oracle, integrate the pieces in a coalition like VCE, or be a best-of-breed component supplier and set up strategic relationships, like NetApp for its storage products.

The approach with the most control is to bring all the pieces in-house and this is what Dell is now doing, with Force 10 Networks completing its converged IT stack jigsaw puzzle. It gets leading edge Ethernet technology. An immediate prospect is that Cisco and Brocade product sales through Dell will now decrease.

In fact Brocade is looking left out in the cold in the sense that it is a best-of-breed networking supplier with no obvious server + storage suitor, the networking equivalent of NetApp. Cisco is having its own problems, having just announced over 6,000 redundancies in a bid to cut costs.

With this buy, Dell becomes a more rounded and capable enterprise and cloud service provider IT vendor, providing stronger competition to HP. This puts increasing pressure on IBM which, although it has its own servers and storage products, does not have an in-house networking capability.

That lack might now have to be addressed as IBM sells in competition with Dell, HP, Oracle and VCE who all will have their own networking capabilities. Perhaps there is hope for a Brocade acquisition yet. ®

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