Cisco’s launch of what it calls a Unified Computing System—putting together networking devices, blade servers, virtualization and other technologies into a system designed to simplify data center implementation, management and administration—effectively takes Cisco beyond its networking roots to compete against server vendors such as IBM and Hewlett-Packard.

But the fact that Cisco is muscling in on the high-end x86 server turf of HP and IBM—while huge news in itself—may be secondary to the availability of a system that could simplify some of the complex tasks around data centers and virtualization—tasks that prevent many companies from taking advantage of all of the benefits of virtualization technologies.

“It isn’t just a new technology. It’s an approach to the data center and an approach to virtualization which we think is very unique in the industry,” says Cisco CEO John Chambers in a video released over the Web.

Cisco says the goal is to cut capital expenses by 20 percent and operating expenses by 30 percent, although the company acknowledges it doesn’t expect customers to simply rip and replace their existing infrastructures. Rather, the company will target customers during natural refreshes or expansions.

And when that happens, the data center customer’s desire to buy the solution that takes advantage of the benefits of virtualization rather than try to piece together the individual components themselves puts Cisco’s new system in a strong position, according to Tim Stammers, senior analyst at advisory and consulting firm Ovum.

“The ability to virtualize transport connectivity and networks is beyond [virtualization vendors’] current scope,” says Stammers, which is what makes it hard for other network services to follow virtualized servers that move from one physical machine to another. “Thus, Cisco’s move could signal a milestone in the convergence of computing and networking.”

Cisco’s unified computing solution combines Cisco’s networking components with VMware’s virtualization technology, with Cisco-branded x86 blade servers based on Intel’s forthcoming Nehalem next-generation Xeon server processors. It provides support for Ethernet, Fibre Channel, Fibre Channel over Ethernet or iSCSI, providing access to both storage area networks (SANs) and network-attached storage (NAS) while supporting their legacy transport investments. In addition, the entire solution can be managed through the Cisco UCS Manager.

Stammers says the move puts Cisco in a strong position.

“Selling the whole enchilada means providing the corn bread wrapping as well as the filling,” says Stammers. “Unlike management systems, servers are commodities, but they are an essential part of the package.

“If Cisco’s customers have to buy their blade servers from HP or Dell, then the door is open for either of those two to offer their management tools to customers, or to tailor their blades to work better with those tools. Moving into more direct competition with those players—and with other systems management players such as IBM and BMC—is a price that Cisco cannot avoid paying unless it wants to be sidelined in the future,” Stammers adds.

And while Cisco’s expertise in these new technology markets may be questioned by some observers, Stammers notes that Cisco has previously enjoyed success in entering new markets.

“Cisco’s most obvious recent expansion onto new turf was the move into the specialist storage networking market, which it made around seven years ago,” he says. “Some doubted Cisco’s ability to do this, but it did, and well.”