A Cisco Systems executive has implied that Cisco might enter the blade server computing market and compete directly with Dell, HP and IBM, who all partner Cisco.
Marie Hatter, Cisco's VP for network systems and security systems, did not deny that Cisco was entering the blade server market, instead saying: "If the blade server market provides a market where we can differentiate and we have a compelling offer, and it's something where a complete architectural play has an opportunity to shine, then it would be a market we'd consider." She was speaking at Cisco's C-Scape forum in San Jose, CA, a couple of days ago. That, to me, implies Cisco is looking at doing just that.
There has been a long-standing and tacit truce in the server and networking market that server vendors don't make and sell network boxes while network vendors don't walk on the server turf. HP has well and truly broken that truce since Mark Hurd became its CEO. Forerunner Carly Fiorina believed in partnering with Cisco and held back HP's in-house ProCurve networking business. Hurd unleashed it and the results are impressive.
ProCurve saw its world-wide switched Layer 2 - Layer 7 port shipments grow by 25.8 per cent in the third quarter of 2008 compared to the same period in 2007. This compares with an industry growth rate of 6.6 percent. For Cisco, ProCurve is an HP account sales killer.
Cisco is not shy about entering new markets, as witnessed by its storage networking business. There are a number of Cisco competitors, such as Foundry and Blade Network Technologies, who would relish the opportunity to have stronger relationships with server vendors were Cisco to start selling blade servers and upset the three wise men of the server biz: Dell, HP and IBM.
Dell already has network product relationships outside Cisco - Foundry in Europe for example - and Cisco competition for its core server business might be the spur it needs to enter the network switch/router market with its own manufactured product above the entry-level PowerConnect.
Dell, after all, has entered printing and storage with its own manufactured product, and you would have thought it viewed network switching/routing as a prime place for it to work its market magic.
Cisco is getting very close to VMware with an investment and integration of its products to VMware's infrastructure and a recent announcement of a virtual switch with Cisco software running as a VM in a VMware server. Perhaps a forthcoming Cisco blade server would have VMware functionality included with it as well as the almost certain network front-end infrastructure on it.
There would have to be a reason for customers to buy Cisco X86 blade servers - say, some architectural and feature advantage - and networking is a sure-fire possibility, with virtualisation another.
One highly likely result of Cisco entering the blade server market would be a price war. Another would be the rapid development of added value technology by Dell, HP and IBM as they sharpen the edges of their blade offerings and try to cut off Cisco's entry into their core markets.
Brocade, in the process of buying Foundry, and competing with Cisco in the storage networking space, would have a great opportunity to partner with server vendors and establish its own DCX data centre switch offering as the consolidated data centre switch. Which server vendor is going to want to support Cisco's Nexus 7000 switch in that role knowing that Cisco could take its existing but limited Linux blade server technology, turn it into general server blade technology and populate data centres with its own blades connected to the Nexus or even plugged straight into it?
If Cisco enters the general blade server market it could be a real smart move, giving it a new $5 billion/year business and establishing its networking gear even more firmly in data centres. On the other hand, it could be the dumbest move it has ever made, irritating the hell out of the server vendors and pouring acid onto the carefully nurtured relationships with them.
Whatever the case, the server vendors will be furious. The gloves will be taken off and any tacit truce between networking and server vendors torn up and thrown away. The era of the blade wars will have started; ProCurve opening move followed by Cisco blade response, and then who knows where it might take us. Oh dear Mark Hurd, you will have opened the genie's bottle and let out the power within.
Cisco was unable to respond in time for this feature. ®