After Cisco’s UCS announcement, the media fight with HP is heating up, it is getting an election time feel. HP asked in a PR piece that was mentioned here, whether you would “let a plumber build your house” meaning whether a mere networking company could be responsible for the whole data center. So John Chambers is now the plumber?
Greg Ferro pointed out that it is really not HP, who strikes back, but Cisco. Over the last years HP ProCurve switches have gained market share. Personally have seen many brand new VMware environments that where sold by an HP team and included HP blades and HP ProCurve switches.
In money terms, Cisco has more to lose if HP challenges them in the switch market. Leaving all questions of technology and competence aside, switches are still a high margin business for Cisco, servers are low-margin for everyone (though Sun may not have heard the news). A typical Cisco 48-port Gb switch starts around $6k, a similar HP ProCurve switch costs around $3k. In both cases we are talking of highly commoditized technology. A price premium of this order of magnitude just does not fly in the server market.
But Cisco has more to win, too, simply because the server market is a lot larger. In order to make servers profitable enough for Cisco standards they have to completely change the market structure. And UCS cleary is designed to do just that. Cisco is not really entering the server market, they are trying to supersede the server market by a new “unifed compute market”.
If you think Cisco cannot move it new markets, read what was written when Cisco started to push their voice products. “They have to sell to a different set of people”, “Voice is different” and “Lucent, Nortel and Alcatel have been doing voice for 100 years”. Have you looked at Lucent/Alcatel and Nortel stock prices recently? The real question will not be how different the markets and technologies are, but how well HP and IBM execute – and they are a completely different calibre then the traditional phone people (with Lucent-bred CEO Fiorina out of the picture, that is).
In Hoff’s metaphor, Cisco is Brock Lesnar, the wrestling star who moved to Mixed Martial Arts (MMA). First he lost because he was only a superb wrestler (i. e. plumber), but as he picked up the other fighting styles he won the UFC (Ultimate Fighting Championship title. Nice comparison that makes a very valid point, as Cisco has proven their ability to learn new tricks. But I think Cisco is not trying to become UFC champion (i.e. beat HP and IBM at their game), they are trying to be the next UFC. It is about starting a new, bigger league of their own.