With Servers, Now Cisco Fights Partners

It’s nice to see The New York Times and others finally catching up to us by reporting that Cisco Systems is working on a new kind of server. We first reported the development of these new servers back in March 2008, essentially a lifetime on the web, which has short memories but (almost) everlasting links. There aren’t any new details in the story except why virtualization is the driving force behind Cisco’s moves.

The Times does a good job of summing up the facts of what we have been reporting all along: Cisco is pretty serious about the data centers. One takeaway: Cisco can gobble up VMware or EMC or both, if it wants to. Of course, those deals have been rumored as well.

When it comes to the server market, the San Jose, Calif.-based router maker is in for hand-to-hand combat. It faces a bloody battle against IBM, Hewlett Packard and Dell, who are all used to making a living off lower-margin boxes. I am not sure Cisco would be able to command a premium in this market, however fancy its products might get. HP and Dell are making strides against Cisco in the enterprise when it comes to lower-cost networking gear.

“There will be massive competitive reactions from both IBM and HP, and we expect this will lead to a new wave of industry consolidation,” Brent Bracelin, an analyst for Pacific Crest Securities, told The New York Times; he believes this will help Cisco rivals Juniper Networks and Brocade.

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