In a bulletin issued this week as a preview to Cisco's Sept. 16 analyst conference, investment firm UBS states that Cisco is likely to enter the blade server market within a year. The firm cites “industry checks” as its source but did not say whether the company's entry would be through acquisition or organic development.
“If true, this would add to Cisco's data center push and open a new multi-billion dollar market undergoing a technology dislocation from traditional servers, but at the risk of further intensify competition with HP and IBM,” the bulletin, authored by analyst Nikos Theodosopoulos, states.
Cisco did not immediately respond to an e-mailed request for comment.
Cisco has partnerships with both HP and IBM, but Cisco's broadening data center ambitions and gradual incursions into data center products and capabilities beyond its traditional switches and routers may have strained those relationships, observers note. Data centers are essentially HP and IBM's bread-and-butter accounts for their server and software products.
But Cisco annually makes at least one significant product or partnership announcement that underscores the company's intentions of moving higher into the data center IT stack from its foundation in switches and routers. Cisco last year announced a $150 million stake in server virtualization software vendor VMware; unveiled an appliance to control pooled data center compute resources; and this year rolled out switches with increasing application intelligence and unified transport fabrics to gain more control over the source, destination and flow of data center traffic. Blade servers are the next most obvious piece when it come to filling out this strategy, observers such as UBS note.
“We expect Cisco to focus on its path to be being the global IT leader,” the UBS bulletin states of the firm's expectations of the Cisco analyst conference. “In particular, we expect Cisco to focus on efforts in collaboration/unified (communications) and data center, including the acquisitions of Webex/PostPath and Nuova, as well as early efforts in consumer. Given Cisco's high networking share and $40 billion sales base, we believe success in these new markets is critical if Cisco is to achieve its 12 percent to17 percent (long term) growth target.”
Cisco declined to comment on the UBS report.