Cisco & IBM Jam on SANs

IBM Corp. (NYSE: IBM) and Cisco Systems Inc. (Nasdaq: CSCO) today announced a joint customer win that represents the largest order to date for the MDS 9000 switches.

AXA Group, a Paris-based worldwide financial services company, has bought a number of MDS 9000 switches, amounting to around 2,000 Fibre Channel ports, which it plans to roll out this year. The company expects to deploy a total of 8,000 ports over the next six years (see AXA Asks for Cisco SAN Switches).

And in another advance on the IBM/Cisco storage networking partnership, Big Blue today announced it will offer Cisco's IP and CWDM (coarse wavelength-division multiplexing) modules for the MDS 9000 family of SAN switches, and will also resell the MDS 9506, a director switch that carries a lower initial price point than the 9509.

The companies didn't disclose the value of the SAN portion of the AXA deal, but said it was part of the $1 billion contract for IT products and services that AXA inked with IBM in February. However, assuming that the Cisco gear will be priced at least at $1,500 per port (a conservative estimate, even factoring in any discounts), the deal would be worth more than $3 million in the first year alone.

Wall Street analysts have said anecdotal evidence suggests Cisco is on track to beat its original goals for the MDS 9000 of doubling sales every quarter for the next few quarters. RBC Capital Markets analyst Robert Montague believes Cisco's storage sales could be in the mid-$20 million range for the current quarter. Other observers, however, caution that Cisco may be inclined to manipulate those numbers, since it's obviously eager to show traction in a new market segment (see Cisco SAN Sales: Ramping Hard?).AXA says it will implement a combination of MDS 9509 directors and 9216 fabric switches as part of storage consolidation projects underway this year at its data centers in the U.S., France, Germany, and the U.K., with similar projects planned for two additional centers in Belgium and Australia in the coming years.

In a statement, Leon Billis, president of AXA's technology services division, says the company picked the Cisco MDS 9000 because of the switches' "industry-leading availability, scaleability, security, and management features." According to Cisco, the IP extension capabilities of the MDS 9000 were another major factor in winning the account.

Meanwhile, IBM says it will become the first vendor to resell Cisco's IP storage services module for the MDS 9000, an eight-port Gigabit Ethernet card that provides support for either iSCSI or Fibre Channel over IP (FCIP). It will also offer a CWDM option for the MDS 9000 that can extend Fibre Channel as much as 100 km (see Cisco Implants IP in SANs).

Whereas FCIP is intended for remote SAN extension and to interconnect SAN "islands" over long distances, the iSCSI option for the MDS 9000 is designed to allow non-Fibre Channel servers and devices to access SAN-attached storage. IBM says the module will support around 10 servers per iSCSI-enabled port; it plans to support Windows via Microsoft Corp.'s (Nasdaq: MSFT) recently released iSCSI driver, as well as Linux servers (see Microsoft Sparks iSCSI Liftoff).

Sprint Corp. (NYSE: FON) recently demonstrated a disaster recovery application using the Cisco IP module to replicate data using FCIP over a simulated distance of 3,600 miles. In addition, European financial futures exchange Euronext LIFFE has been running the IP services module with several MDS 9509 switches to link its Amsterdam, Paris, and London data centers (see Sprint Stretches Storage Over IP and Cisco Touts Storage-Over-IP Project).But check out the price on this: IBM is listing the eight-port IP blade -- with iSCSI only -- at $57,000. For both FCIP and iSCSI, the list price is $74,000.

What's with the high price tag on what is more or less a Gigabit Ethernet switch? Peter Thurston, director of SAN and disk systems marketing at IBM, says it's the value of the IP module in conjunction with the MDS switch that justifies its price.

"This is not a Gigabit Ethernet switch," he says. "You have to say: 'What is the price of other vendors' IP-to-FC router costs?' Those are 1 Gig in and FC out. If you add the sum of those up, you get a pretty expensive solution." He adds that because the IP services module is integrated into the Cisco MDS 9000 switches, it doesn't chew up any interswitch links (ISLs), as an external WAN connectivity device would.

In addition to the IP and CWDM modules, IBM will offer the MDS 9506 director, which provides between 16 and 128 ports. The advantage here is a lower entry price: With 16 ports, the 9506 is $109,000 -- about half the $219,660 that IBM lists for a 64-port 9509.

The IP services module, the CWDM option, and the MDS 9506 switch will be available from IBM on August 1.IBM's latest Cisco SAN offerings follow a major price adjustment Big Blue made in mid-June on the MDS 9000, reducing list prices by roughly 30 percent. IBM executives say it was shifting away from a "premium price" strategy to a "competition-based strategy," a decision probably fueled by Hewlett-Packard Co.'s (NYSE: HPQ) lower initial pricing on the Cisco switches (see IBM Slashes Cisco MDS Pricing and HP Moves Hard on Cisco).

"If you look at it, you'll see we're competitively priced," says Thurston. [Ed. note: In other words, IBM quickly discovered that not many folks were willing to pay a 30 percent premium for the Cisco brand name.]

Todd Spangler, US Editor, Byte and Switch