Acquisition glutton Cisco was initially slow to enter the wireless local area network (WLAN) sector, doubting demand for the technology. After producing its first WLAN switch in May 2004, the networking giant’s $450 million purchase of Airespace fills in some product gaps, such as secure wireless networks and voice over WLAN.
Cisco’s acquisition of the four-year-old WLAN switch maker will enable it to undermine the positions of rivals Alcatel, Nortel Networks and NEC, all of which have recently signed partnership deals with Airespace. The deal is also expected to spark rapid consolidation in the WLAN switch market, which is still dominated by start-ups.
One company that is getting used to Cisco muscling in on its patch is storage switch maker McData. It has even acknowledged that its $235 million acquisition plans for rival CNT in January were partly inspired by the level of competition that Cisco’s entry into that niche of the storage area networking (SAN) market created. McData says the deal will enhance its presence in Europe and add a professional services business, reducing its reliance on OEM partners.
But McData faces a tough time trying to convince sceptics about the wisdom of its deal. There is a great deal of overlap between the two product sets: McData’s recently released Intrepid i10K Director switch competes directly with CNT’s equivalent, UMD, and there are SAN router overlaps too. Until details of future product plans are released, customers may be wary about buying products that could be phased out.
Of January’s many software deals, IBM’s purchase of Corio stands out. IBM has a vast software portfolio but is adamant that it is not in the applications business. Its decision to buy applications service provider (ASP) Corio for $182 million therefore looks like a departure. But not when Corio’s business model is examined further.
What it gets with Corio is a services company that installs a customer-owned version of popular enterprise applications (Oracle, PeopleSoft, SAP, Siebel, Epiphany or Ariba) at its data centre and provides an on-going service of applications management. Customers include Toshiba America, the US Coastguard and Visa. Corio is one of the few survivors of the ASP market, which lost momentum in the 2003. With all of the main applications vendors now offering to deliver their products as an ‘on-demand’ service, IBM’s Global Services unit does not want to be left out.