Cisco's virtual server game
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| Cisco CEO John Chambers needs to try new things to keep his company growing while corporate technology budgets shrink. |
It is the buzz of the tech world: Cisco Systems may soon try selling servers, those heavy-duty computers that companies use to run critical back-office applications. The prospect of router giant Cisco's entering the already crowded $55-billion-a-year server market is intriguing (imagine if LeBron James decided to try his hand at football) but also has the potential to disappoint. (Remember Michael Jordan's ill-fated effort to play professional baseball?)
With his server gambit, Cisco (CSCO, Fortune 500) CEO John Chambers appears to be targeting a very specific niche: the trendy "virtualization" segment of the server business, which is expected to grow 43% this year to $2.7 billion worldwide, according to research from Gartner. Virtualization basically is a way to make servers more efficient. Using specialized software, one computer with a hard drive and a network connection can act like several smaller computers and hard drives on different networks. When everything goes right, more work gets done with less hardware and electricity. Multiply that effect in a data center with thousands of servers, and you can see why corporate customers like it, especially in times of cutting costs. Computer maker Dell (DELL, Fortune 500), for example, believes it can cut its information technology budget 10% this year without sacrificing productivity.
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I think this is a bad move by Cisco and in all probability they will fail. The server market is already crowded. On top of it, the big players themselves are making big losses these days. Cisco will need a lot of time to attract customers from big players and I dont think its easy.
Shouldn't Cisco try making better networking equipment before they get into yet another product line?
This is a great opportunity for Cisco to get their cut of the server/virtualization market. Watch out HP, IBM, and Dell.
Stefan, your writing skills are incredible.
I'm wonder that they are thinking that they can beat HP or other big players on their field. Of course, they will sell some server. But the big time from Cisco is over. They just can grow if they are buying new companies.
And because of they economy I'm expecting more than 10% lay off's for the next six month. Furthermore they business for Cisco is going down at least -35% visa plan.
Last but not least they are not trustful for me anymore. There are several reason: E.g, they faked ratings on their Website, although meanwhile ratings are not longer possible.
Let's see… they need a chip, they get that from Intel. They need a VM, they license that from VMware. They need storage, they get that from NetApp. They need an OS, they get that from Microsoft, Red Hat or Sun. Exactly how does Cisco make money reselling everyone else's products?
This is total stupidity. Cisco's just dorking with the server guys.