IBM, which just last week announced it was selling its low-end x86 server business to Lenovo for $2.3 billion, reportedly now is looking to unload its software-defined networking business for as much as $1 billion.
Citing unnamed sources, Re/code reported that while the deal with Lenovo includes selling some networking assets, including switches, what isn't part of the sale is IBM's offerings around software-defined networking (SDN), a burgeoning part of the industry that promises to shake up the networking space.
According to the report, IBM has approached a range of networking vendors—including Cisco Systems, Dell, Hewlett-Packard, Juniper Networks and Fujitsu—though it's unclear what kind of reception Big Blue is getting. IBM is not commenting on the report.
SDN is designed to make networks more scalable, programmable, flexible and cost-effective by removing the network intelligence from complex and expensive hardware and placing it in software. The goal is to make it as easy to configure networks as it is to create virtual servers, and to automate many of the tasks around configuration and management.
SDN has been the hot topic in networking for almost two years, though broad adoption is still on the horizon. According to a recent survey by QuinStreet Enterprise—the publisher of eWEEK, as well as other news sites, such as Baseline, CIO Insight and IT Business Edge—while SDN has gotten a lot of attention, it's still an emerging technology and has relatively low penetration in the enterprise. Less than 30 percent of those surveyed by QuinStreet Enterprise have deployed or plan to deploy SDN in the next 12 months, while another 40 percent have no plans to implement the technology.
However, analysts and others in the industry are expecting the market to take off. Dell'Oro Group analysts in November 2013 said they expect the market to grow sixfold over the next five years, while IDC analysts in December 2012 said revenues could hit $3.7 billion by 2016. A study in early 2013 by SDN startup Plexxi, Website SDNCentral and venture capital firm Venture Partners forecast the SDN market to grow to $35 billion by 2018.
Every established networking player is building out their own SDN portfolios, while a range of startups are offering products for the market. In addition, companies like VMware—which in 2012 bought startup Nicira for $1.26 billion—are expanding their larger IT solutions with new SDN capabilities.
Despite the growth potential in the market, IBM officials reportedly don't see SDN as a key part of the business going forward. Along with building out its own SDN business, IBM has been active in standards efforts around the technology, including working with Cisco in kicking off the OpenDaylight Project, which aims to create an open SDN platform.
However, IBM is putting a lot of effort and money behind such trends as cloud computing, analytics, big data and software, and is investing in such businesses as its Smarter Planet. The company recently announced a $1 billion push to create a new business group around its Watson technology, and $1.2 billion to grow its cloud computing capabilities in 40 data centers around the world. And the company hasn't been shy about shedding businesses that no longer fit into its strategic goals. IBM sold its PC business to Lenovo in 2005 and has since ditched other business, such as printers.