Cisco plans big push into server market

The largest maker of networking equipment may disrupt its relationship with partners like IBM and Hewlett-Packard.
(From The New York Times)

The story "Cisco plans big push into server market" published January 19, 2009 at 3:29 PM is no longer available on CNET News.

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[Mr. Dee]

ah well, it will be sad to see when Microsoft, HP, IBM team up and crush you like a bug Cisco.

[srb8220]

IBM and Microsoft are not friendly. HP and IBM are not friendly. A 3 way relationship between these organizations to go after Cisco would take an awfully long time to organize - even if it was possible. So I think this is an unlikely scenario. ("crush you like a bug Cisco"? Someone has issues.)

The more likely scenario is that Cisco's entry into this market will fail all on it's own with only a little bit of help from their competitors. Without getting too complicated and length here is why:

1. Cisco's sales team does not have street cred or relationships with the server groups within organizations they way that HP, Microsoft and IBM do. IBM and HP have this street cred because of the solid products they build. Microsoft is generally not well liked by the server and ap dev folks but they are there by default. It will take Cisco's sales force too long to gain this credibility within the server group. IBM and HP will tell the server groups at their customer that they will be coming out with a similar product and will further stall Cisco's progress into this space.

2. Considering that these servers will only address virtualized applications it seems like a niche market which Cisco is not very good at. Sure, there are a lot of applications being virtualized but many are not. And, those that are can be virtualized on fairly inexpensive blade server hardware with VMware software. Cisco's solution will have to offer amazing value in order to win a large slice of a small sliver of virtualization business that is out there. Microsoft's virtualization software will be out soon and licensed under a company''s EA agreement. After 3 years of only modest revenue and market share growth Cisco will kill the product.

3. Maybe I just don't have all of the facts on the solution yet, but the question I have is the same one that I'm sure any CIO would have...Why?

One thing is for sure. Cisco doesn't have a very long list of losing product lines. As such, I am not going to count them out of this market completely. However, I will have to see what their solution promises and it will be an uphill battle for them.

[rshimizu12]

I agree IBM has years of experience with Virtualization so it's hard to see how Cisco expects to compete with IBM. The other factor is that virtualization field is already crowded.

[troyrader]

No company executes as well as Cisco has. It will be interesting to watch them educate the old school companies, just as they have with telephony in recent years.

[srb8220]

Old school telephony companies like Avaya, Nortel (now bankrupt) and all of the other needed educating. Their products were old, inflexible, completely proprietary and expensive. IBM and HP don't make server solutions that could be described that same way. Big difference.

[Penguinisto]

Heh - Cisco makes damned solid gear, but with as much as it typically charges for it? I'd have to see the pricetags first.

@Mr. Dee: IBM usually sticks with the bigger iron these days, MSFT can't even get their OS parked on half of anybody's servers, and the big battle is usually HP vs. Dell for servers anyway.

[RandomRip]

Cisco better focus on its core product. Someday someone is going to take the same $5 worth of parts and come up with a cheaper easier product that doesn't require a CCIE to operate. Cisco products work well but come with an OS that only COBOL engineer could love.

[Random_Walk]

IOS is built to be light and fast. I doubt that they would use it as a server OS. More likely, they would use Linux or possibly BSD or Solaris as their base OS type.

[Random_Walk]

I think everyone is focusing on the wrong angle. From what I have gathered, Cisco is wanting to build blade servers that fit into their switches. Some of these would be obvious candidates like proxy and firewall servers.

[cayucodies]

I think, even if it just works well as a metaphor, that Cisco would fall on its face within a year with this product, if it doesn't look for a very strong ally before it even starts putting their first bundle together. See, neither IBM nor HP need that big of a try to offset Cisco's sales. They can trip Cisco just by injecting some modest cash into their existing server technologies. Oh, I forgot, we haven't even started to talk about what sort of a fit Dell would through once Cisco takes a bite or two off their pie. Good luck Cisco, look for a friend you play nice with, and then jump in the pool.

[jearnhar]

Our CTO, Padmasree Warrior, (quoted in the Times article) blogged on the concept of "unified computing" yesterday. She states, in part: "Lately, there has been a lot of speculation by the technorati that ?something is going on over at Cisco!? I am sure you have all read the blogs and reports in traditional media asserting that Cisco is going to enter new markets, compete for new business, and build new products. The answer? Yes, Yes and Yes, of course!"

See her full post here: http://blogs.cisco.com/news/comments/introducing_unified_computing_to_the_data_center/#more

[gnanakumarr]

The competitive landscape will be tough for Cisco, as Sun, HP, IBM and Dell are major players in this market. I speculate this move from Cisco might turn out like AMD acquiring ATI to be competitive with nvidia.