California-based networking hardware provider Cisco Systems, has unveiled its first server computer. Its approach, called a unified computing system, packages new Cisco networking equipment with Cisco's first blade server, storage hardware and virtualisation software.
The move expands Cisco's role beyond networking needs, including routers and switches, into the new territory of server manufacturing. This could bring the company into direct conflict with its partners like IBM, Hewlett-Packard, and Dell, which have long been sourcing their peripherals from Cisco.
Cisco's packaged system, which will go on sale in the second quarter of the year, is said to provide an especially flexible and efficient architecture, enabling information technology managers to get more out of their hardware. By extending its reach, Cisco also hopes to vie for a larger share of spending from data centres.
Cisco chief executive John Chambers yesterday said in a videoconference, ''What we are really talking about here is catching the next market evolution.'' He said the rise of virtualisation software had created the need for new types of server computers.
"It gives us a chance to be the leading company not just in communications but in IT," Chambers added.
Virtualisation software, made popular by VMware, in which Cisco acquired a $150-million worth stake in July 2007 before VMWare took it public, lets businesses run more software applications on each physical server, helping them save on capital costs. It also loosens the boundaries between servers, storage systems and networking equipment, which now deal with more fluid virtual applications than dedicated software. (See: After Intel, Cisco to invest $150 million in VMware)
But virtualisation deployments have not made their way to most servers partly because moving virtual machines between physical computers has been difficult, something Cisco's new platform will address.
With its unified computing system, Cisco bundles server, storage and networking systems in a single product. The company says it can run hundreds of virtual servers on a single machine.
Analysts said the product is the biggest strategic shift in the server market to occur in years. They expect that the major server makers will release similar products soon.
While servers are far less profitable than networking equipment, Cisco has worked with software makers like VMware and BMC to sell software and hardware together in order to command some of the highest profit margins in the server industry.
Chambers was joined in the conference by a host of partners including Intel, Microsoft, storage-maker EMC and its subsidiary VMWare, which will play a pivotal role in Cisco's new data centre architecture with its virtualisation software.