Networking Balancing Act

There is change once again at IBM Corp.'s Networking Hardware Division (NHD). IBM corporate has dipped into its well of management talent and come up with a new team for the Research Triangle Park, N.C.-based division. The firm I work for, Sterling Research, was able to extensively interview the new business line managers as well as their bosses. The most important impression to come out of these interviews is the sense that there is a new spirit of "networking agnosticism" driving NHD's investment decisions. This agnosticism applies to Ethernet and Token Ring, cells and frames, and SNA and TCP/IP.

Token Ring vs. Ethernet: NHD appears to be committed to a policy of LAN technology agnosticism. The new business line managers indicate that they intend to increase their investments in Ethernet product development. Their goal is to bring these investments up to a level commensurate with Ethernet's importance in the networking industry. At the same time, they remain committed to Token Ring. NHD's strategy is two-pronged: Invest in Ethernet to exploit its ever-rising growth curve and market potential, and continue to invest in Token Ring so as to protect the investments made by its customers in this technology.

Ethernet's new status within NHD appears to have brought about a change in its buy vs. build philosophy about these products. In the early 1990s, NHD adopted an aggressive ATM-based product strategy and effectively de-emphasized Ethernet product development. It then struck a series of OEM and reseller agreements in order to acquire Ethernet switch products for the market. NHD has now, by and large, abandoned most of these relationships, preferring instead to bring Ethernet product development back under its wing.

Cells vs. frames: NHD's new spirit has affected its position with regard to cells vs. frames in the enterprise. Today, NHD has a very respectable position in the ATM switch market, a result of its decision in the early part of the decade to back this technology over frame-based Ethernet. The vision underlying this decision -- that ATM would dominate from the backbone to the desktop -- did not, of course, materialize. And, to be fair, NHD was not the only organization surprised by Ethernet's endurance. Regardless of the past, NHD's current position is that cell and frame technologies are complementary and equal. Each is viewed as an important piece in a total enterprise solution, and neither will be favored over the other. As in the case of Token Ring vs. Ethernet, NHD's strategy appears to be one of balance, with the objective of being a best-of-breed provider of both cell- and frame-based products.

SNA vs. TCP/IP: In what may be the most important manifestation of its new balancing philosophy, NHD has revised its position on TCP/IP. Although NHD has been a TCP/IP supplier for more than a decade, some users have had a lingering suspicion that NHD's heart really belonged to SNA. From a purely business perspective, this love affair made sense, given that SNA and SNA-related products constituted the backbone of NHD's multibillion-dollar revenue stream. The downside of this love, of course, is that NHD was slow to react to the steadily increasing importance of TCP/IP in the networking industry. And as a result of this slow response, NHD found itself in the awkward position of being challenged by Cisco Systems Inc. in the area of SNA-TCP/IP convergence products.

NHD now appears to have solved this problem of protocol preference once and for all. It has elevated TCP/IP to a position equal to its stature in the networking industry -- and equal in importance to SNA within NHD. In particular, NHD intends to re-establish what it considers its natural position as the pre-eminent provider of SNA-TCP/IP convergence solutions.

NHD seems to be on the right track. If anything, its abandonment of technology preferences brings its product strategy into alignment with that of other networking suppliers. NHD's most crucial step is to maintain a sense of momentum in its product announcements. Such momentum will go far in convincing the market that its professed networking agnosticism is for real. NHD is, in effect, facing the challenge that arises immediately after devising a new strategy: execution. If it can execute, NHD might find itself among the top-tier vendors for non-SNA networking products. --Sam Alunni is vice president of networking at Sterling Research (Sterling, Mass.). Contact him at alunni@sterlingresearch.com.