Cisco Moving into the Server Market

Paul Lilly

Move 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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