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Tech Check
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The technology industry can make for strange bed-fellows, and even stranger competitors, and there may be no finer example than what's shaping up between Hewlett-Packard and Cisco Systems this morning. A few months ago, I, and so many other tech reporters, began to post details about Cisco's upcoming entry into the blade server market, after an intriguing blog on Cisco's own corporate website about so-called "Unified Computing." And while this seemed to make good business sense for Cisco, it would be a problem for the company's relationship with its long-time tech partner Hewlett-Packard.
You see, HP owns the server and blade server markets. The most recent data from IDC suggests that HP controls better than half the server market, accounting for billions of dollars in quarterly sales at the company; and its strangle-hold on the blade server side of things is only tightening, at the expense of rivals IBM, in second place, and Dell, a distant third and trailing.
Cisco is the networking leader. Always has been. But it sees big time opportunity in blade servers and is coming to market with a who's who of endorsers for the technology: Microsoft, Intel, VMWare, BMC and others. IBM enjoys a partnership with Juniper Networks, and Brocade, through its purchase of Foundry Networks, is also a player. Not necessarily just in blades, but in networking too. Confused? Don't be. The lines of routers, networking and blade are blurring along with the players dominating the markets. And Cisco's announcements today will send ripples through some of the biggest names in all of tech.
Why such attention lavished on blade servers? The technology has been around for some time, and immediately enjoyed a following because of how flexible the servers can be. Simple, small racks of equipment replaced entire roomfuls of equipment. They save big on space and energy, and because these servers can be adapted simply by popping in boards, or blades, into slots inside the rack, they can quickly grow, or in today's climate, shrink depending upon what a company's particular needs might be.
Cisco's Chief Technology Officer Padmasree Warrior (great name) has laid down the law in the Wall Street Journal, saying "We're going to compete with HP. I don't want to sugarcoat that. There is bound to be change in the landscape of who you compete with and who you partner with."
The fact is, Cisco's networking business has been slowing since 2005, and it's been exploring new revenue streams ever since. It's not a surprise that Cisco is a major player in set-top boxes, video-conferencing, and a bunch of other initiatives that seem outside its traditional core. And with almost $30 billion in cash in the bank, the company can basically afford to buy its way into any other market it deems an opportunity.
And according to IDC, the server world is ripe for tapping. This will be a $100 billion opportunity this year alone, as corporations build out data centers with new software and hardware. Cisco sees dollar signs, but it's got to get through the HP juggernaut to realize the true potential. That pits Cisco chief John Chambers against HP chief Mark Hurd, two operational geniuses with a pleasant outward demeanor, and an internal, cutthroat approach to competition.
Servers might seem like a boring, backroom, black-box kind of technology. But with data centers and server farms cropping up all over the country like mushrooms -- just ask Google, Cisco vs. HP vs. IBM vs. Microsoft, Dell, John Chambers, Mark Hurd and so many others might be the most interesting battle in the tech business for the next few years.
Questions? Comments?
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