As an analyst, I get the pleasure of connecting dots all the time.
Here are a few dots.
I was wandering around the IBM website the other day and came across an e-server switching and connectivity modules that was their preferred brand – Cisco – no surprise. It was further down the page that, to my surprise, the Nortel modules started showing up. Layer 2 and Layer 3 Gb switching and then a 10 Gb switching module. So it seemed that IBM is presenting multiple choices for their customers. Nortel and Cisco flavors.
And, then on Tuesday, June 12, 2007 Nortel and IBM announced an IP PBX on System I hardware. This is where 3Com had gone with the VCX offering a year ago. Offering customers choice on top of IBM hardware for software is a solid strategy. The key is whether the channel bites any harder than they had done for the 3Com software offering.
Even more interesting is the announcement on June 15, 2007 where IBM and Nortel agreed to create a technology center in Raleigh NC that would build design and build networking modules for the e-series blade servers that IBM is marketing to the SMB industry. According to CNet, this deal counters the one that Cisco and HP signed earlier in 2007 to beef up the capabilities of blade server technology.
I bet that the terms of the Nortel-IBM deal, compared to the Cisco-HP deal are much more favorable to the server vendor. Cisco would command a pretty strong premium, I would expect.
Analysis
So, networking elements as part of the all-in-one blade servers are all the rage. Wasn't that called a 'hub' in the old days (early 90's)? In those days these devices shared power – networking, server, phone system, print controller etc – in a single card cage. Networking back then was shared-10Mb, not
Despite the storyline how things never really change… or there are no new ideas… this blog entry is about the need to add functionality to the product to create a new category that is more valuable than had existed. My youngest son (Paul, 16) is starting a job at a Dunkin' Donuts and needed new running shoes because he'll be on his feet for long periods of time. So, we went to Target to get him shoes. While standing in the section while he and my wife toured the shelves looking for the best shoe, I commented on all the great patterns available in kiddie shoes. Cars, kittens, you name it, and it was embossed on the side of the shoe. My wife Anne said "You can't get plain kiddie shoes any more."
Then I said "It's like sugar in breakfast cereal. It doesn't sell unless there's sugar."
Now, all these dots come together to remind us about the need for new categories that are combinations of other functionality to create new value that is greater than the value of the original categories. Servers and switches. Servers and VoIP applications. Hello Kitty and rubber boots. Sugar and cereal.
What delightful innovations and combinations of product categories are we likely to see next?
