A week after selling its server business unit to Lenovo, IBM is now exploring the sale of some of its networking assets and may be seeking as much as a $1 billion, sources familiar with the matter tell Re/code.
When Big Blue sold its x86 server unit to Lenovo in a deal worth $2.3 billion last week, included with the deal were several networking products — switches and other goods used to enable connections between servers.
Not included in the sale to Lenovo was another IBM product line focused on software-defined networking. IBM calls it Software Defined Network for Virtual Environments.
SDN is a relatively new networking technology that allows for networks within data centers to be set up and configured quickly using only software, similar to the way that virtual machines are “spun up” within servers. The benefit is that the network becomes more flexible and easier to change without the need to swap out new hardware.
IBM is said to have informally approached several companies in the networking business, including Dell, Hewlett-Packard, Cisco, Juniper and Fujitsu, to gauge interest. As IBM has recently spent big to expand its Watson cognitive computing unit as well as its SoftLayer cloud computing unit, the SDN unit is not seen as strategically important, according to a source familiar with the company’s thinking.
It’s unclear how interested those companies might be in buying the unit. One executive at one of the companies approached, who asked not to be named because the matter is private, said his company would at the very least “take a look in order to understand it.”
Ed Barbini, a spokesman for IBM, had no comment, citing the company’s policy of not commenting on rumors and speculation. Representatives of HP, Dell and Juniper declined to comment. A representative for Fujitsu was not immediately available.
Several SDN startups have materialized in recent years, including Big Switch Networks and Nicira (now part of VMware), with the aim of attacking established networking vendors like Cisco Systems and Juniper.
Meanwhile, those same networking vendors — Cisco and Hewlett-Packard and Dell — have all sought to push various flavors of SDN technology of their own and have helped create different standards around it.
IBM had been involved with a standards effort known as Open Daylight, which garnered support from Cisco and HP among others, but which has not received wide-scale industry backing.
One stumbling block may be the price IBM is seeking. One executive described IBM’s initial asking price of $1 billion as “pretty optimistic.”