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Cisco Ventures Into Server Market

January 20, 2009

The New York Times reported on Monday, that Cisco Systems Inc. plans to start selling servers equipped with virtualization software as early as March, a move that could position it for tough competition with Hewlett-Packard Co. and IBM.

The report said Cisco aims to sell a server combining hardware and virtualization software from Cisco and VMWare Inc., in which Cisco holds a small stake.

This move was an expected one for Cisco to go into the server market, with technology websites over the past few months calling it by the code name “California.”

There was no company officials immediately available for comment.

A new server product is likely to be aimed at data centers, which Cisco has identified as a key growth area as an explosion of consumer-generated content and shift to Web-based software in business operations has meant increasing data traffic, according to analysts.

However, analysts also said that this move might be a difficult one, noting that it would turn IBM and HP, with whom Cisco partners in selling its other network equipment, into rivals.

The world’s biggest network equipment maker, Cisco, has been expanding its services into a wider range of products and services, as growth slows in its traditional routers and switches business.

Cisco’s expansion into unified communications systems has already led to great competition with another partner, Microsoft Corp.

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