Contender for the battle of server virtualizationIn a bold and very aggressive move, Cisco this week announced its new line of commercial servers that specialize in virtualization.

I don’t know about you all, but I find this interesting, yet puzzling.

First off, this will be Cisco’s debut into an already competitive market. You wouldn’t imagine there would be much of a customer pool left when competing with giants such as Dell, HP and IBM, but Cisco seems to think so.

Of course, Cisco is no small player either boasting annual revenue $40 billion and 65% gross profits in the networking market.

However, the puzzling part is why it would want to start fresh in this fierce market where vendors generally only make a 25% profit margin anyway? Also, what kind of impact will this have on Cisco’s relationships/partnerships with companies like IBM, Dell and HP? I wouldn’t imagine there are a lot of fuzzy, good feelings about this.

I found a New York Times blog dedicated to Cisco’s announcement and it has a nice quote from James Staten, an analyst at Forrester Research who attended Cisco’s launch.

He said, “This is war and a direct frontal assault on IBM and HP.”

On top of that comment, HP also had some strong statements of its own regarding this launch: “It’s appropriate that Cisco launched their server in a museum.” taking jabs at the concept design of these servers.

Going in for the kill, HP added: “Would you let a plumber build your house?”

Ouch.

Personally, I don’t care about Cisco making servers. However, this maneuver could have a significant impact on the networking market as we know it.

HP has already responded to Cisco’s announcement by increasing its investment in networking equipment. I don’t know what HP has planned, but I bet “hell hath no fury like a vendor scorned!”

But it does makes me wonder what HP has planned for its already affordable ProCurve line.

But what about vendors like Dell and IBM that have only a small presence in the networking field? I wonder if they will be so quick to advertise Cisco routers/switches along with their products?

I speculate that we may start seeing increased sales from networking companies like Juniper, Enterasys and Riverbed.

But I guess only time with tell.

What do you all think? Feel free to post a comment to this blog.

Related read: How open is Cisco Unified Computer System?

 

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Ryan Slosser

My name is Ryan. I work in development here at Plixer. I mostly deal with hardware deployment. I enjoy kayaking and fishing during the summer and skiing in the winter. People can count on me and I always give 100% unless I'm donating blood.

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