Competitors, Analysts Scratch Heads at Cisco Unified Computing

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While many applaud the networking giant’s entry into the server market, some competitors and analysts are failing to see the wisdom or benefits of Cisco becoming the one-stop data centre shop.

Solution providers, analysts and bloggers erupted in a flurry of comment as Cisco Systems announced its unified computing initiative. And while some applauded the company for its chutzpah in entering a market in which it has no presence currently, an even larger group was scratching its collective head and asking, “Why?”

“My first reaction was shared by a few people out there [in the blogosphere], which is Cisco is making a bold move in a market where it has zero market share,” said Mike Banic, vice president of marketing for Juniper Networks’ Ethernet Platform business group.

Cisco announced its entry into the server market through its Unified Computing initiative, which will employ technologies and a partner ecosystem enabling virtualization technology, services and blade servers to power the next generation of data centres.

While the idea is a solid one, enabling Cisco to be an end-to-end vendor in the data centre, it has a large summit to scale in getting customers on board, many say.

“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,” wrote James Staten and Galen Schreck of Forrester Research in their blog. “We think UCS will succeed mostly in green field deployments inside of companies who have a strong strategic partnership with Cisco. As they realise the gains promised, others will start to take them seriously.”

Juniper’s Banic agrees. “Cisco is trying to sell into a new market where enterprise customers treat their existing server vendors as their trusted advisers,” he said. “Those companies have a strong foundation and strong businesses with even broader product lines.”

Banic questions the openness of Cisco’s new technology. “What they’ve announced has a lot of proprietary hooks,” he said. “Their Ethernet technology is not standard, and their standards for converged I/O won’t be in place for another year or two. That goes against the desire for choice and flexibility in the marketplace.

“This technology pens customers in –it’s proprietary. Interoperability is not even a choice at this point,” he added.

Cisco, however, said the technology, for the most part, is standards-based. “This system is based on industry-standard processor architectures, memory architectures, network architectures, storage architectures and cabling architectures,” the company wrote on its Web site. “We avoided doing anything proprietary everywhere we could. … Even the APIs used for management and provisioning were designed to co-exist and based on extensible semantics and open interfaces.”

Still, Banic admits to having a hard time seeing the cost savings in companies moving to Cisco’s new technology. “I’m trying to understand what substantiates Cisco’s claim that this technology can lower cap x (capital expenditures) and op x (operational expenditures) – from the information that’s been provided so far, there’s insufficient data. Part of that, I’m sure, is it’s just too early to see,” he said.

While much, if not all, the technology announced today won’t be available for many months, David Tan, CTO and co-founder of Chips Computer Consulting in Hicksville, N.Y., said Cisco might be a welcome addition in the server space.

“I think they’ll bring a fresh perspective and will help shake things up,” he said. “I see that they needed to find way to extend their footprint, and this makes more sense than owning just a piece of the data centre.”

However, from a business perspective, “I don’t understand why they would do this now, especially since no one in that space is making money,” Tan said.