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."
