Cisco's server pitch

March 17, 2009: 9:26 AM ET
cisco-chambers-otellini
Cisco CEO John Chambers and Intel CEO Paul Otellini (center) are flanked by other Cisco executives as they explain how the two companies will work together on servers. Photo: Cisco
cisco-server
Cisco's new servers use more memory and faster I/O connections than mainstream competitors, and they come loaded with management software. Photo: Cisco

John Chambers is known for delivering Cisco's sales pitch like a revival preacher, complete with a country twang – and he summoned plenty of true believers Monday as he outlined Cisco's plans to bust into the $55 billion server market.

In the Cisco CEO's amen corner were no lesser lights than Intel (INTC) CEO Paul Otellini, VMware (VMW) CEO Paul Maritz, and EMC (EMC) CEO Joe Tucci – the top guys in chips, virtualization and storage. During a 90-minute online news conference that doubled as a showcase for Cisco's (CSCO) high-end teleconference system, that CEO chorus testified that Cisco's new "unified computing" gear is the real deal: By building more memory, faster data speeds and new management features into its boxes, Cisco might shake up the status quo in corporate data centers the way the iPod and iTunes did in digital music.

Why does the world need another server technology? In a word, virtualization. Even during this downturn, efficiency-hungry companies are embracing the technology, which cuts down capital costs by squeezing more work out of less computing equipment. (For example, a single server might act like three different virtual ones.) But today's servers can have trouble pulling off the virtualization trick; split one into several virtual pieces and it's likely to run low on memory and struggle to quickly access data. Managing virtual servers is a challenge, too – you can't kick a virtual machine, or check it to make sure the right lights are blinking.

Cisco claims its new servers address these problems. Each will hold more memory than servers from competitors like Hewlett-Packard (HPQ) and IBM (IBM), and they'll use faster and more reliable Ethernet connections to move data. A control panel from BMC Software (BMC) promises to make it easier to keep track of virtual machines – the next best thing to kicking them and checking the lights.

How much will it all cost? Cisco isn't saying yet, but it won't be cheap. The company isn't trying to play in the commodity blade server market; it's going to market this product to folks like large manufacturers, healthcare providers and data hosting companies who spend a lot on servers and software.

Even if Cisco's new hardware works as advertised, it won't take the market by storm overnight. To see why, consider Bryan Doerr, chief technology officer at data center provider Savvis (SVVS). Doerr is among the first customers to get his hands on Cisco's equipment; he's been testing it for three weeks. Though Doerr says the Cisco gear has been performing well in the lab, he hasn't yet thrown real work at it to prove it can scale, and he doesn't have a detailed timetable for rolling it out in significant volume.

And while Doerr believes Cisco's gear will help him do more work without having to add more people, he also says it won't dramatically slash his costs in the near-term. After all, even if he starts buying a lot of servers from Cisco, he'll still have to run the equipment he already owns. (For the record, he bought much of that equipment and management software from HP.)

Not that the established server vendors can be complacent. Doerr says Cisco's unified computing package is the most groundbreaking new idea he's seen in the data center in years, and it he's ready to open his wallet to get it. It's still early, but it sounds like in the server world, John Chambers is already winning converts.

Join the Conversation
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.