market, and plans to start selling servers in competition with old
partners like Hewlett-Packard Co. and IBM Corp.
The servers are part of a package put together by Cisco and partners
like BMC Software and VMware Inc. to harness the power of a recent
technology called "virtualization" that lets one computer act like
several.
San Jose, Calif.-based Cisco is the world's largest maker of computer
networking gear, but Monday's announcement greatly expands its
ambitions in the corporate "data center" market. It's moving from
selling the switches that allow the computers to talk to each other to
selling virtually entire data centers, in conjunction with its
partners.
In a videoconference, Cisco Chief Executive John Chambers emphasized
that its "Unified Computing System" is not an attempt to move into the
commodity server market.
"We have very little interest in the product space," Chambers said.
"We're after: `How does it tie together?'"
Chambers called the unified computing product the biggest step for
Cisco since it added switches to its original router products through
the acquisition of Crescendo Communications Inc. in 1993.
Since then, the company has used the cash generated by its enormously
successful computer networking gear — it had $29.5 billion on hand in
its last quarterly report — to buy up numerous companies, adding
consumer gadgets and cable-TV equipment to its portfolio. This time,
however, it's not diversifying through an acquisition, but by building
its own products.
IDC analyst Michelle Bailey said Cisco isn't trying to take on HP and
IBM in the broader market for servers, but rather is focusing on a
certain set of very large customers. Their data centers, for instance,
keep track of customer accounts, run large Web sites or deliver movies
to PCs or cell phones. That's a $20 billion business annually.
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