Watching Old Friends Become EnemiesBy Lawrence Walsh | Print
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Cisco says its unified computing systems -- or virtualized blade servers -- are not intended to compete with existing server offerings by Dell, Hewlett-Packard and IBM. Not only are they a competitive offering, but an example of how vendors are pushing into adjacent markets and turning old friends into enemies.
In a global virtual press and analyst roundtable, Cisco CTO Padmasree Warrior said blade servers being developed by Cisco for its Unified Computing Systems are not intended to compete with existing servers offered by IBM, Dell, Hewlett-Packard or Sun Microsystems. Rather, she says, the UCS strategy is to put the assets in place to help the data center "evolve."
"We’re not competing with the legacy server market, but looking at where the data center has to evolve," Warrior said.
Warrior isn’t wrong, but she’s not exactly being genuine, either. The key word is "evolve," and the current marketplace is definitely evolving. Vendors are not only pushing into new technologies and markets, they are quickly creating enemies out of old partners. Cisco is a perfect example of how this is unfolding.
A data center built with virtualization as its backbone-enabling technology will provide enterprises and midsize businesses with incredible new management tools and utilization rates. A completely virtualized data center will reduce costs by providing greater flexibility and speed in deploying new applications and resources, and reduced costs in staffing and management. And, of course, a virtualized data center will have higher degrees of integration with adjacent systems—desktops to servers to storage—that will reduce physical footprint and operating costs.
Ah, but all that is contingent upon the data center having virtualized and integrated infrastructure, similar to the vision of Cisco’s Unified Computing Systems. In other words, enterprises will have to either replace or augment their existing infrastructure with the new Cisco gear, which will in effect result in competition with legacy systems.
When Cisco unveiled its Unified Computing Systems strategy earlier this year, it said the virtualized data center vision that hinged on a new class of blade servers was aimed at high-end enterprise data center environments. Initially, Cisco said it would provide UCS direct and then offer it indirectly through a handful of large partners that had the capability and capacity to deliver the complex system.
However, at the Cisco Partner Summit in Boston last month, Cisco announced its intentions to launch a line of rack-mount servers that would provide immediate opportunities for partners to sell Cisco-branded servers. These C-Class servers, Cisco said, would be compatible with the higher-end UCS blades when they become available. In other words, Cisco is launching servers that will compete against entry- and mid-level servers currently offered by Dell, IBM, HP and others.
During the same virtual roundtable, Warrior and colleague Doug Dennerline, senior vice president and general manager of collaboration software, also set the limits of Cisco’s cloud strategy. They said that Cisco would provide some software as a service, deliver platforms as a service (e.g., Webex) and support the underlying infrastructure, but would not deliver infrastructure as a service as Amazon, eBay and scores of hosting companies are doing.
It’s a nice sentiment, but the reality is that Cisco’s limits are not exactly solid. Dennerline outlined plans for adding greater integration of voice, e-mail and instant messaging to the Webex platform, which will undoubtedly create more tension with current foes Microsoft and Citrix, as well as draw new competitors, such as Skype and Google.
When asked about high-end, cloud-based enterprise applications such as CRM and ERP, Dennerline said Cisco has no designs on those markets. Good news for Salesforce.com, Oracle, Microsoft and Intuit. However, Dennerline wouldn’t draw the line at not fielding productivity apps, such as Microsoft Office, Google Apps or Zoho.
Cisco isn’t wrong for wanting a piece of adjacent markets. And, despite Warrior’s assertions, Cisco has been quite honest and vocal about its intent to explore any technology or market that hangs off its core products and has the potential to be a billion-dollar business.
And Cisco isn’t alone; several other vendors are plunging into unfamiliar markets that just a few years ago seemed entirely alien. ViewSonic—best known for its displays and monitors—launched a personal computer. Dell continues to venture away from its core and is reportedly developing a handheld computer and/or smartphone. Hewlett-Packard is injecting more power behind its ProCurve networking gear. Security vendor SonicWall recently dived into the wireless LAN market. And the list goes on.
What worked yesterday for vendors isn’t necessarily going to work for them tomorrow. Cisco, like other vendors at the top of their markets, must find new markets and technologies to fuel their revenue and growth engines as core products and markets saturate and commoditize. It’s not only reasonable for a vendor to venture beyond its comfort zone, but an imperative in an increasing competitive marketplace.
The lesson here is that limiting comments like Warrior’s should be taken with a grain of salt. We are living in a dynamic, transformative era in which today’s friendly partners could easily become competitors tomorrow.
Lawrence M. Walsh is vice president and group publisher of Channel Insider. Read his research reports at [CI] Perspectives.