Cisco CEO John Chambers and Intel CEO Paul Otellini (center) are flanked by other Cisco executives as they explain how the two companies will work together on servers. Photo: Cisco

Cisco's new servers use more memory and faster I/O connections than mainstream competitors, and they come loaded with management software. Photo: Cisco

John Chambers is known for delivering Cisco's sales pitch like a revival preacher, complete with a country twang – and he summoned plenty of true believers Monday as he outlined Cisco's plans to bust into the $55 billion server market.

In the Cisco CEO's amen corner were no lesser lights than Intel (INTC) CEO Paul Otellini, VMware (VMW) CEO Paul Maritz, and EMC (EMC) CEO Joe Tucci – the top guys in chips, virtualization and storage. During a 90-minute online news conference that doubled as a showcase for Cisco's (CSCO) high-end teleconference system, that CEO chorus testified that Cisco's new "unified computing" gear is the real deal: By building more memory, faster data speeds and new management features into its boxes, Cisco might shake up the status quo in corporate data centers the way the iPod and iTunes did in digital music. More

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.

Full story (CSCO) (IBM) (HP) (DELL) (VMW) (INTC) (AMD) (MSFT) (JAVA)

Bryan Cantrill and Mike Shapiro, Distinguished Engineers at Sun, dreamed up a new type of storage product and convinced executives to let them build it in relative isolation. Image: Sun

Maybe there's something about unconventional office space that gets Silicon Valley's creative juices flowing.

Bill Hewlett and Dave Packard worked their magic in a garage. Apple's (AAPL) Macintosh development team flew a pirate flag over the Bandley 3 building. Now Sun Microsystems (JAVA) hopes a young team that toiled in an unmarked — and reportedly unkempt –  San Francisco loft can spark a turnaround in a tough economy, and build a new billion-dollar business. More

With a line of stylish new drives and a TV marketing campaign, Seagate hopes to make digital backup more popular than … well, flossing. Image: Seagate

Aaron Levie runs his own online storage and collaboration company, so he sounds a little sheepish when he admits that, before he founded Box.net, he didn't back up the files on his computer. He's not alone. Recent studies show that at most, 17 percent of PC owners use external storage for backup, slightly higher than the percentage of people who floss daily.

This statistic, as you might imagine, annoys storage executives as much as the flossing number annoys dentists. More

SanDisk founder and CEO Eli Harari rebuffed Samsung's buyout offer, saying it undervalued the company. Photo: SanDisk

Politics, as humorist FP Dunne famously put it, ain't beanbag. If Dunne had spent his days observing Silicon Valley innovators instead of Chicago machine pols, he might have said the same about the flash memory business.

It's cutthroat stuff. Just look at the standoff between ailing flash innovator SanDisk (SNDK) and South Korean powerhouse Samsung.

On the surface, this seems like a straightforward buyout attempt: Samsung is the world's largest supplier of the chips that provide storage for gadgets like iPods, iPhones and digital cameras; SanDisk has a bucketload of flash patents worth a half billion dollars a year in licensing fees. SanDisk stock has taken a beating lately, so it makes sense that Samsung would try to buy the company out; it publicly offered $5.85 billion in cash for the company this week, or $26 per share. More

There haven't been many tech IPOs lately – only three this year, in fact. People here in Silicon Valley have certainly noticed  – this place thrives on venture capital, so in financial terms, the mood has been a little like a maternity ward going without any deliveries. Yes, entrepreneurs have still gotten rich selling out to big companies like Google and Microsoft, but without the same kind of cigar-passing glee that follows a Wall Street debut.

So it's fair to expect some buzz on Friday, when San Antonio hosting company Rackspace takes a bow. As tech IPOs go, the prospectus on this one reads like a pretty safe bet: the ten-year-old company logged net revenues of $362 million in 2007, and a profit (yes, profit!) of $17.8 million. It's offering 15 million shares at between $12 and $16 per share in a Dutch auction format (what Google used for its IPO), and it's backed by some great names in venture capital, including Sequoia and Norwest Venture Partners.

Sounds good, right? But there are also some red flags to watch out for. We'll get to those later. More

EMC division president Mark Lewis says banks are slow to spend these days. Image: EMC

With the turmoil in the financial markets, it shouldn't come as a surprise that banks aren't going on a spending spree. That's one of the backdrops to Fortune's Brainstorm Tech conference in Half Moon Bay, where a handpicked group of tech luminaries have gathered to talk about the digital future.

In a side conversation near the bar here at the Ritz-Carlton, EMC (EMC) executive Mark Lewis drove it home. Financial services companies are "doing very thorough reviews" before buying tech gear, he said – that's a nice way of saying they're tight-fisted – and that's bound to have a real impact on companies that sell to them. (Think Dell (DELL), Sun Microsystems (JAVA), Cisco Systems (CSCO) and others.) Lewis, president of storage giant EMC's content management division, didn't seem alarmed. He said that because customers haven't recently overspent on technology, the buying pause isn't likely to last long. But for now, they're pushing for a faster return on their investment in technology, because budgets are tight.

Iomega's Rev drives compete with portable hard drives from Seagate and Western Digital; EMC hopes to buy the company and turbocharge the brand. Image: Iomega

What happened to Iomega (IOM)?

It was a gravity-defying technology stock during its best run a decade ago. At its peak in 1996, the company's nearly $6 billion valuation meant many investors were betting it would be the future of digital storage.

Iomega seemed to be at the right place at the right time; broadband connections and music downloads were not yet common, and few tech companies recognized that storage would be a growth market. Meanwhile Iomega's proprietary Zip disks and Zip drives provided the capacity of a computer hard drive and the portability of a floppy disk, making it a snap to move chunky files like digital images or huge spreadsheets from one PC to another. More

The HP Mini laptop is aimed at the education market, but it could appeal to road warriors as well. Image: HP

Pick up HP's new $500 mini-laptop, and the first thing you notice is the aluminum casing. Though the thing weighs only about 2.5 pounds, what's striking is how its sleek skin makes it feel solid and professional – not at all what you'd expect from a budget PC.

I'm in a suite at the Palace Hotel in San Francisco getting a first look at Hewlett-Packard's (HPQ) latest machine, which the company hopes will help it steal share from Dell (DELL) and Apple (AAPL) in the education market. (Each of the three companies has just under 20 percent of the worldwide market.) HP's development team, I'm told, consulted educators as they designed the 2133 Mini-Note, and as I turn the laptop over in my hands that comes through in little details. More

Lenovo's critically acclaimed ThinkPad X300 laptop does without a hard drive. Image: Lenovo

While munching on a reuben at Birk's, a steakhouse in Silicon Valley, Seagate (STX) CEO Bill Watkins is explaining why he's not too worried about a these trendy new laptops that have everything but a hard drive.

On the surface, this would seem to be a big problem. Seagate, after all, is the world's largest hard drive maker with expected sales of more than $3 billion this quarter – so Watkins likes to see his wares go into more gadgets, not fewer. It's easy to see why he tends not to favor devices like Lenovo's sleek ThinkPad X300, which is winning raves for its light weight and silent operation, and its 64-gigabyte flash storage drive. More