IBM Signs Networking Deal With Cisco - InformationWeek

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IBM Signs Networking Deal With Cisco

IBM retreated from the IP networking market today, selling the patents and intellectual property for its IP and Ethernet switches and routers to Cisco Systems.

The announcement was part of a five-year, $2 billion deal under which IBM will provide Cisco with components--primarily chipsets--to build its switching equipment. The companies also announced plans to jointly offer network consulting and design services, including procurement, implementation, and maintenance services.

IBM plans to phase out the development and marketing of its networking products, according to Michel Mayer, general manager of networking in IBM's technology group. These products include the Nways switches and other IP and Ethernet equipment. "It is not our intention to manufacture, sell, or continue" development of IBM IP and Ethernet networking equipment, said Selby Wellman, senior VP of Cisco's Interworks business division.

IBM said it will continue to support existing switch customers, and the companies said they will develop "migration paths" from IBM IP and Ethernet equipment to Cisco products. Also, IBM will retain ownership and continue developing its token ring equipment, host-based SNA systems, Ethernet adapters, and other networking equipment.

Analysts say IBM's move away from networking equipment frees the company to focus on markets it is more interested in. "IBM sees its future in selling E-commerce software, servers, and other products for E-business," said Joseph Skorupa, a director at Ryan, Hankin & Kent.

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