Is innovation enough for Cisco’s new servers to succeed?
Opinion – Like many of those interested in technology, I have been following Cisco’s integrated blade server announcement today. And there is no doubt that it is an enticing new approach that plays into current cost savings and sustainability trends. But it is unclear whether technology is enough to make Cisco’s UCS the iPhone of datacenters, a product that is so revolutionary that it will change the way we think about datacenters. So let’s calm down and give the Unified Computing System (UCS) idea some time – and rivals to catch up.
Every time a major company moves into a new market, a market that is already occupied by strong players, we see similar scenarios and two possible outcomes: If you aren’t in it for second place, we either see dramatic success or failure. I wonder which one is in Cisco’s future.
From a technology point of view, the company’s idea to transform the blade server is certain to make datacenter managers rethink their hardware strategy. Based on Intel Nehalem Xeon processors, the devices will consolidate access to storage area networks, local area networks, network attached storage and high-performance computing networks. There is a unified network fabric that is compatible with Ethernet, Fibre Channel over Ethernet and iSCSI. Connectivity is provided through up to four 10 Gb/s interfaces per server. Up to 320 servers are supported within one UCS.
According to Cisco, fewer switches and network adapters as well as less cabling will the maintenance of the network easier and the entire data center more power efficient. It is an interesting product idea that fits into Cisco’s expertise, which is combined with consulting services that potentially could increase the profit margin of these servers.
But then we also know that corporations will not just jump on the Cisco train tomorrow. Even if Cisco has a good name in large-scale networking equipment, it has no credibility in providing and maintaining entire servers. Customers may evaluate Cisco’s offerings, but market leader HP and other rivals such as Dell, IBM and Sun have a solid customer base and are unlikely to give those up without a fight. In a best case scenario, Cisco will have to convince new customers by giving heavy discounts, no matter how good the technology proves to be. And large-scale installations are rather unlikely at this time anyway.
Even if some analysts claim that the UCS is as game-changing as the iPhone was for the smartphone world, Cisco itself is a bit more modest and describes the UCS as an “evolution” for blade servers. An iPhone-like success may be more of a dream for Cisco than reality as server purchases are not driven by perception and emotions, but hard facts. And UCS will have to first prove that it really is as good as Cisco claims it is.
UCS will need much more than innovation to succeed. Reminds me of Transmeta, which tried to challenge Intel in CPUs and ended up being acquired. Cisco has much more than these servers and servers may not become the core business of Cisco, but competing in this admittedly very profitable segment seems to be a substantial risk to me. I wonder how long it will take HP to catch up?
Wolfgang Gruener is the founder of TG Daily. The opinions expressed in this commentary are solely those of the author.