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Cisco's Foray Into Blades Starts Well
There was more than a little skepticism at Cisco's entry into the blade server business last year. The company was the recognized expert in the field of networking equipment, but expertise in one field doesn't always make for a winner in another. Who in the world would want to take on IBM, HP and Dell all at once? Cisco, the networking company, with its entry into the blades server business. So how is the company doing as we approach the end of year one?
But so far, after almost a full year of selling its Unified Computing System (UCS) bladed and rack-mounted servers, Cisco (NASDAQ: CSCO) seems to be making decent headway. During its most recent earnings call, CEO John Chambers said the firm has scored 400 customer wins, double what it had at the end of the prior quarter.
Chambers said more details would come after the close of the current quarter in April. But he said Cisco is already meeting its goals.
"In terms of the basis for the Nexus in terms of a $1 billion run rate, I feel very comfortable we'll be beyond that in this calendar year. In fact, we are rapidly closing on that already," he said on the conference call. He added that most of those 400 customers are doing "pilots and implementation."
Jackie Ross, vice president of the Server Access and Virtualization Technology Group at Cisco, elaborated on the wins to InternetNews.com. She said it's a "broad selection" of customers, in areas of education, health care, government, service providers, retail and media.
More than half of deployments are for customers that have made an investment in virtualized environments, which was Cisco's target market for the blades. It specifically designed them with virtualization issues of memory and network bottlenecking involved. But that means almost half of the customers are not using them in a virtualized setting. So why are they buying them?
Lots of reasons, Ross said. "One is the unified fabric. You have right at the server access point the convergence of your Internet and Fibre Channel technology, so instead of having multiple Ethernet NICs and Fibre Channel host bus adapters, you have one adapter. So you can eliminate the number of adapters and cables required by 50 percent," she said.
Also, the Cisco blades have a very large memory footprint, up to four times the memory of a traditional two-socket blade. "This is important for both virtualized and non-virtualized workloads," Ross said. "If you have large, memory-intensive apps, you would have had to go to a more expensive four-socket server to get the memory required before. But now you can stay in a cost-effective two-socket server and get the memory you require."
The final reason is the integrated management of server, network and storage all from a single management platform. There are fewer gateways, fewer switches, and it's all managed from a single platform, Ross said.
So far, Cisco has made a good start, but it's only a start, noted analyst Charles King. "I think Cisco was more serious about the server business than some customers and their competitors seemed to believe when they made the UCS announcement last year," King, president of Pund-IT, told InternetNews.com.
"We will need more time to determine their level of success. When you're talking about companies like Dell and HP, the customer list is in the tens of thousands. So Cisco has a way to go," he added. "It seems to me [with] the increase in customers that the naysayers who discounted the idea of Cisco playing in this space were talking out of their hat. If [Cisco] can keep that momentum going they can be a player in this space for some time to come."