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Cisco and the Server Market

The article in this Monday's issue of the New York Times about Cisco's plans to enter the market for servers with virtualization software created frenzy within the news media. Dozens of news articles quoting the Times story appeared within a few hours, although Cisco has made no statement of its own, either confirming or denying the rumor. If Cisco does indeed plan to market its own servers it would be a logical extension of its business market strategy.Cisco first helped create the router market and then expanded into switches. Once it successfully captured a giant share of the data communications networking market, it expanded into voice communications systems. After less than a decade, Cisco is standing atop the voice communications market and is gaining a reputation as the leader in the emerging market for Unified Communications (UC). Voice and UC are currently software-centric solutions dependent on servers for call control and applications processing, so naturally Cisco would think about offering a full hardware/software package based on virtually dedicated servers. Cisco's UC offerings are becoming too-server intensive: virtually dedicated servers would eliminate a lot of server hardware and lower costs. Most of the news reports included the observation that a Cisco entry into the server market would step on the toes of some big IT market players, such as HP, IBM, and Dell. Although Cisco has worked with these server suppliers in the past, that would not stop them from becoming a direct competitor. Cisco did not let its business relationships with such major voice system suppliers as Lucent Technologies, Siemens and NEC stop its voice communications system plans.

Expanding into the market for applications servers, then perhaps storage servers, is not a far-fetched plan of attack.