Cisco Unveils Unified Computing System Approach and Enters Blade Server Market

| Mar 16, 2009 | Data Center | Competitive Intelligence Report

| Analyst: Steve Schuchart

Current Perspective: Positive
Vendor Importance: Very High
Market Impact: Very High

Event Summary

March 16, 2009 -- Cisco has released an evolutionary data center architecture, innovative services, and an open ecosystem of partners to help customers develop next-generation virtualized data centers. Cisco is delivering Unified Computing, an architecture that bridges the silos in the data center into one unified architecture. Cisco’s Unified Computing System unites compute, network, storage access, and virtualization resources in a single system that can reduce IT infrastructure costs and complexity.

Analytical Summary

• Current Perspective: Positive on Cisco’s announcement of the Cisco Unified Computing System, because it takes Cisco to the next level in the data center, unifying the major components of the virtualized data center into a single whole that can be managed much more sensibly. UCS is really the ultimate extension of Cisco’s Data Center 3.0 strategy to unify the network layer under Ethernet. UCS will feature a new product and market for Cisco, a blade server based on Intel’s upcoming “Nehalem” line of x86 server chips. This makes Cisco a direct competitor of IBM, HP, and Dell in the blade server market and shows a clear line of growth for Cisco as it tries to become the preeminent data center player.

• Vendor Importance: Very high to Cisco, because the Unified Computing System represents not only the culmination of the Data Center 3.0 vision, but also an entirely new way for customers to consider Cisco in the data center. With blade server technology and a hand in the coordinated management of virtual servers, Cisco has positioned itself to gain mind and market share on a level with IBM, HP, and Dell. Cisco is making it clear that it is the master of the entire data center and there is no product segment in the data center in which it will not compete.

• Market Impact: Very high on the data center market, both on the compute side and on the networking side, because Cisco’s entry into the general x86 computing market with a new line of blade servers is a major market incursion against IBM, HP, and Dell, as well as other smaller x86 blade server vendors. Cisco does not have a full line of x86 servers, only its blade server line, but with the virtualization and management focus Cisco is giving the product, it will make an impact on competitors. There will certainly still be “coopitition” between Cisco and the Big Three server vendors, but it is clear that there is a new fight centered around who can offer the most seamless and fluid virtualized data centers.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Hewlett-Packard is probably in the most direct line of competition with Cisco. HP has been competing with Cisco in networking for some time. Hewlett-Packard should go on the immediate offensive with Cisco after the Nehalem announcement, showing comparisons and playing up its own partnerships with VMware and Microsoft. In addition, HP should point out to customers its storage and storage management software offerings. HP should also continue to tout the ease-of=use capabilities that it emphasizes across its entire data center product line.

• IBM has already taken the first step by increasing its partnerships with Juniper for networking. IBM should use its long history in virtualization and in the data center as weapons against Cisco in the blade server market. IBM should tout its bladeserver.org standards organization and its commitment to open source software as reasons for customers to stick with the organization. IBM also has extremely strong storage and storage management software offerings that it can offer customers where Cisco cannot or must partner.

• Dell needs to continue with what it is best at, and that is competing on price in the blade server market. Cisco has a reputation for high-priced goods and services and Dell can take advantage of that. It will be particularly effective considering the weakness in the current economy and the general decline in IT budgets.

• Sun Microsystems will first need to reassure customers of its own financial stability in a weakening economy while showing customers the high level of engineering and reliability that Sun’s own blade server offerings enjoy. Sun should also use its strong position in open source software and the Solaris operating system as a strong differentiator. Sun also has a strong storage and archiving division that it can use to show that its offerings are more complete than Cisco’s.

Recommended End User / Customer Actions

• Customers should keep an eye on what Cisco is doing with Unified Computing System, but no real action is necessary until the Nehalem processor ships from Intel. When that happens, Cisco will have pricing, competitors will have Nehalem products to compete, and companies can consider evaluation units.

• Customers that are all-Cisco shops and heavily invested in virtualization should take a look at the Cisco Unified Computing System. A long and in-depth evaluation of the product should be undertaken, as well as a discussion of what to do for general rack-mount servers. Many companies will think twice about a two-vendor solution for data center servers.

• Data center managers who use blade servers from other manufactures such as IBM, HP, Dell, and Sun should inquire with their incumbent vendor about how their capabilities match up to those on the new Cisco blade servers and the Unified Computing System in general.

• Customers in the small and medium data center market should keep an eye on Cisco’s Unified Computing System, but know that the product is really designed for the large data center customer. That does not preclude Cisco from scaling down the products and concepts behind it for use in smaller data centers, but it does leave them out for now.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Data Center | More information

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