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Cisco's Unified Computing System stirs competition, old and new

In addition to a new data center architecture, Cisco's Unified Computing System is inviting fiercer competition with former partners, even as smaller networking vendors attempt to seize some market share.

"This is the future of the data center," Cisco Systems CEO John Chambers proudly proclaimed while unveiling the...

networking giant's long-rumored Unified Computing System (UCS).

UCS may indeed be the future, but before that future becomes a reality, the networking giant must prove that it is ready to play for much higher stakes than it is used to in the networking world, where "Cisco" is just another word for "default."

The server market potential is huge: IDC estimated revenues of $53.3 billion for the server market as a whole in 2008, which was down 3% from the year before.

But while the overall opportunity remains large, margins on the increasingly commoditized hardware remain tight and the landscape competitive.

Cisco's "Unified Computing System" brings to bear not just a new blade server but also a host of partners to help make cloud computing a more scalable, reliable experience, including Microsoft, BMC Software, EMC, NetApp, and VMware.

Even as these new partnerships arise, though, some old ones are turning sour.

On one side, the likes of HP, IBM and Dell are doing their best to keep a new competitor -- and an old partner -- out; on the other, networking pure-plays like Juniper and Brocade hope to make a play for customers dissatisfied with IT hegemony.

It would be a rather bold play, even without a recession, but Chambers sees the economic climate as the perfect chance for Cisco to enter and dominate new IT fields.

"As a company, we can come out of this with a stretch goal of being the leader not just in communications but in IT on a global basis," Chambers told BusinessWeek in a recent interview.

Not everyone is so optimistic on the company's behalf.

"You can be hypnotized by him, because John's a master speaker," said Michael Banic, vice president of Juniper Networks, a Cisco competitor of a much scrappier, network-focused bent (Juniper's annual revenues are roughly a tenth of Cisco's). But his response to Cisco's discussion of "executive engagement" on server sales was blunt.

"You don't have any market share in this market yet," Banic said.

It's a fact that gave even some more neutral parties pause, and it's a reminder that Cisco has a major task ahead.

"[N]o one is clamoring for another server vendor, so despite the strong showing of partners at this launch, Cisco will have to win over enterprise server buyers who up to this point have had no relationship with the company," blogged James Staten and Galen Schreck, Forrester analysts, who predicted mostly green-field deployment wins early on. "As they realize the gains promised, others will start to take [Cisco] seriously."

Additional "California" and Unified Computing coverage
Cisco unveils Unified Computing, merging servers, storage and networks

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Cisco Unified Computing irrelevant to most channel partners for now

Cisco will try to use partnerships with VMware, EMC, NetApp, Accenture and Intel to forge new selling relationships with server buying centers within the enterprise, but this move has further chilled once-strong partnerships with companies like HP and IBM, a lapse the competition has been quick to jump on.

Juniper, for example, has cozied up to IBM, getting a nod at Big Blue's Cloud Day as a partner of choice for key demonstrations.

It's these partnerships and a focus on compatibility that smaller players are using to leverage their way into the enterprise, offering up a "best of breed" strategy that companies state can be delivered at a cost of ownership lower than going with the new one-stop-shop Cisco.

"They're trying to build a proprietary connection between the server and the computer network, and our view is that customers demand flexibility and choice," Banic said. "If you get to a point [where] you're buying such a significant amount of your IT infrastructure from a single company, you're basically losing control of your IT strategy."

Brocade echoed these sentiments in an official statement that touted the benefits of a vendor ecosystem over single providers while attacking Cisco's new proposed proprietary interfaces.

"A dynamic and virtualized data center holds the promise of many compelling benefits for end users, including increased server utilization, decrease in power footprint and more efficient operations in general," Brocade's statement read. "However, achieving this goal is a complex challenge that can be best tackled by a broad ecosystem of industry partners and not based on a proprietary, singular architecture of one company."

Whichever company comes out on top for both the server and networking markets, the competition is likely to be fierce and entrenched, leaving IT professionals the likely winners.

"The question of how the network plays a role in simplifying current server, storage, and datacenter architectures is one we are going to be having for the next several years," IDC director Abner Germanow wrote in an email. He said the strength of partnerships that Cisco's rivals form will be a telling sign. "We won't know how ahead or behind Juniper is in that endeavor until Juniper announces (or fails to announce) partnerships with ... specialists who support their Stratus project."

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