Cisco To Disrupt Server Market?

Probably not, but the expected entry of the networking vendor should at least offer some excitement.
Probably not, but the expected entry of the networking vendor should at least offer some excitement.No less than the New York Times has reported that networking hardware vendor Cisco is planning to make an entry into the server market, and will show prototypes as early as March. Pundits are predicting that this could be a disruptive move, implying that the splash Cisco will make could completely remake the server market.

Cisco is to be congratulated for getting such exalted media attention for its product plans. But, frankly, it is unlikely to make a huge splash, and for several good reasons.

First, they're not exactly inventing the telephone or doing something else entirely original. They are entering an existing market, and, like everyone else, the basis of their marketing plans will prove to be obsolete by the time their product comes out. The market will adjust to their entry, instantly creating a new economic environment not anticipated by their plans. All hype aside, that's the way it usually works.

Second, they are planning a virtualization software and server hardware bundle, and it's not like you can't get that already.

Third, the kind of profit margin that Cisco is used to in the networking hardware market is not available in the highly competitive server market. If they price of their product with an eye toward getting the kind of margin that they are accustomed to, they will defeat themselves. If they price below the market in order to get some market share, the financial results could be so grim that they will lose interest.

If there is any disruption, it may be from the other server vendors who suddenly decide to stop buying networking hardware from this new-born competitor and start making their own. Poaching goes both ways.

But whatever happens will probably be good for the buyers  competition is good, and more competition is better.

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