1/27/2009 -- Don't look now, but the world's biggest networking vendor might be preparing to push into the server market. That's the upshot of a report which appeared last week in The New York Times. Citing both named and unnamed sources, including Cisco CTO Padmasree Warrior, the Times said that Cisco plans to compete alongside server behemoths Hewlett-Packard Co. and IBM Corp.

And if that happens, said industry veteran Charles King, Cisco's long-standing partnering arrangements with HP and IBM could be radically inverted.

"Where sparks are most apt to fly is when a vendor dares to venture into a market outside its traditional areas of expertise, attempting to occupy territory currently inhabited -- or even dominated -- by its partners," King said. "In the case of Cisco, is it possible for a network equipment vendor to compete effectively against bare knuckles server makers? Will the company's refusal to stay within its traditional boundaries damage its relationships with HP and IBM?"

It's a good question. Cisco and HP notched a "strategic relationship" almost seven years ago; most recently, the two vendors partnered to promote joint Unified Communications (UC) offerings. Cisco and IBM, on the other hand, have partnered on a bevy of occasions. There's a sense, in fact, in which IBM has been Cisco's most steadfast partner.

Obviously, Cisco's move into hardware could change that. True, it already competes with both HP and IBM in other markets. HP's ProCurve networking division, most obviously, has been nibbling at Cisco's heels -- and trying to establish itself in the bread-and-butter enterprise switching segment -- for more than a decade now. And in spite of its closeness with Cisco, Big Blue both partners with other networking players (such as Brocade) and has made noises about marketing its own networking gear. In this sense, , there's a certain logic to Cisco's impending server market push.

That's the view which King adopts. He said there's a mix of co-opetition and experimentation in Cisco's move. "The concept of 'co-opetition'...has been a byword in the IT industry for years. Sometimes these relationships are simple matters of expedience: IBM works closely with Oracle to support enterprise customers' database needs, but its own DB2 database product is a direct competitor of Oracle's in many of those same accounts."

The more important question, King argued, is whether Cisco's planned push will prove to be at all disruptive. "These are interesting issues, to be sure, but even if the Times article and its unnamed sources are entirely accurate, [I] doubt the market or the various participants' mutual customers will notice anything different, at least in the short term. It takes awhile for customers to assess, quantify and adjust to any new product -- especially one from a vendor untested in that market."

There's also the question of which segment of the market Cisco plans to target. "[T]he area of Cisco's particular interest -- servers that support highly integrated/optimized virtualization -- is a relatively new market for most companies. In fact, relatively few virtualization-specific server offerings are currently available, though...more [will] come," King said. "But the biggest potential market for such offerings -- cloud computing -- is something that makes a possible server offering by Cisco and its larger Unified Computing effort seem viable. Integrated, optimized virtualization is, after all, what underlies robust cloud computing performance." --Stephen Swoyer