Cisco launches into the server market

Networking giant Cisco has thrown down the gauntlet as it unveiled its first server computer, disrupting the well-defined boundaries with the likes of the world's largest computer makers such as IBM, HP and Dell. At a news conference, chief executive John T. Chambers noted that the timing was right for the company to move. "What we are really talking about here is catching the next market evolution," Mr. Chambers said during a news conference.

Dubbed Unified Computing System (UCS), Cisco's new server platform competes by combining server, storage and networking systems into a single product by leveraging virtualization. Cisco says it will be possible to run hundreds of virtual servers on just one of its machines.

One risk to consider in this daring move by Cisco is the fact that its largest competitors in the server market--IBM and HP--are also its largest channel partners. The rewards however, are certainly appealing; even a small gain in the $40 billion server market will certainly move the revenue indicator forward for Cisco.

As can be expected, competitors are criticizing the move as the opposite of a more "open" model that the industry is moving toward. And while this is just the opening salvo, competitors are not taking it lying down either. Already, HP has responded by increasing its investment in networking equipment.

For more on this story:
- check out this article at The New York Times
- check out this article at CNNMoney

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