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Cisco Getting into Server Market

In a matter of months, networking equipment giant Cisco Systems ( has confirmed it will be entering the server market, which may disrupt a comfortable alliance with partners like Hewlett-Packard ( and IBM (

Prior to Cisco's announcement reported in Monday's New York Times, in September, investment firm UBS predicted Cisco would enter the blade server market within a year. According to the New York Times report, however, some industry experts warn that as the release date approaches, Cisco's move may "cause an all-out war among the tech titans for one another's customers."

The New York Times reports that Cisco's new server will stand out because of its "sophisticated virtualization software."

Having announced a $150-million stake in server virtualization software developer VMware last year shortly after unveiling the vFrame appliance to control pooled data center resources. Even in September 2008, UBS predicted that manufacturing blade servers would be the next step for the company.

Tech blogger Dave Jeyes noted that this is the second announcement this month of a new Cisco product outside of the company's core competency, having announced a home stereo networking system for the consumer market earlier in the month.

He also notes that it may be a mistake for Cisco to spread itself too thin in not only a challenging market segment, as well as an overall gloomy economic horizon.

"Conventional wisdom would lead Cisco to focus on its core competencies during a downturn," Jeyes noted. "A recession is simply a difficult time to invest in marketing to new audiences."

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