Cisco Moving into the Server Market
PrintMove over HP and IBM, and make room for Cisco Systems. Cisco, who has remained focused on routers, switches, and other networking gear and software responsible for the majority of its $40 billion a year in revenue and 65 percent gross profit margins, plans to release a server computer equipped with sophisticated virtualization software within the next few months, according to The New York Times.
"This will be the most important and most talked-about product of the year," said Brent Bracelin, a hardware analyst for Pacific Crest Securities. "There will be massive competitive reactions from both IBM. and HP, and we expect this will lead to a new wave of industry consolidation."
Cisco, who views the move "not as new market, but a market transition," will focus just on virtual applications rather than release a general purpose server. Other details remain sparse and Cisco isn't yet saying what exactly it envisions for its new product, but rumors suggest the company will also bundle networking hardware and virtualization software from Cisco and VMware, the latter of which Cisco owns close to a 2 percent stake.
Look for more details to emerge in the next couple of months.
Image Credit: Cisco
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nekollx
January 20, 2009 at 10:47am
...bundle networking hardware and virtualization software from Cisco and
VMware, the latter of which Cisco owns close to a 2 percent stake.
wow a whopping 2%?
ddimick
January 20, 2009 at 10:56am
A "whopping" 2% is 7.8 million shares currently valued at $164 million. So yeah, it's probably enough to get the VMWare engineers to make sure their stuff works on Cisco's hardware platforms, even if they weren't interested in bundling their products together just to capture additional revenue.
nekollx
January 20, 2009 at 11:15am
but come on its still less then 2% thats seems a bit insignificent a note. Even if the numbers seem big to us imagine what the numbers are for another company with a 5% share
ddimick
January 20, 2009 at 11:40am
This stuff isn't at all hard to research.
Cisco is the third largest corporate shareholder after EMC, who owns a majority stake (and is a significant Cisco partner), and Intel, who owns only slightly more than Cisco. The rest of the major shareholders are investment funds from companies like Fidelity and UBS.
nekollx
January 20, 2009 at 11:46am
and a 'major' share holder is less then 2% it just seems irelevent to mention a less then 2% share...
unless thats a typo of course...
ddimick
January 20, 2009 at 12:14pm
What I'm trying to tell you is that 2% IS a large stake in a company the size of VMWare. It might not seem like it, but when you consider how many shares there are and how many different people and organizations own them, even 1% is a big deal. Including all types of all shareholders, Cisco is #6. Numbers 2-4 are asset management (e.g. 401k) holdings.
When VMWare is making major decisions, Cisco gets a seat at the table.
1. EMC Corp
2. UBS Global Asset Management (Americas), Inc.
3. Fidelity Management & Research
4. Fidelity Growth Company Fund
5. Intel Corporation
6. Cisco Systems
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