Cisco and EMC are set to sell hardware and software packages that integrate Ciscos servers, networking gear and management software with EMCs storage hardware and EMC subsidiary VMwares server virtualisation software. The move is a small step along the path of technology convergence, and a bet that customers will prefer to buy pre-integrated data centre systems rather than knit them together from multiple vendors.
Technology convergence is driving this deal
EMC made its first major expansion beyond its traditional storage business in 2005, when it bought VMware. This year Cisco made an equally dramatic expansion from its core networking business, into the supply of integrated racks of server blade and network switches. Both moves were attempts to anticipate a convergence of server, storage and networking technologies, which will eventually marginalise vendors that cannot supply most of that infrastructure stack. The alliance announced this week is a continuation of those efforts.
Server virtualisation software is at the heart of this convergence, and VMwares software in particular is beginning to resemble an operating system that manages the entire resources of a data centre, and dynamically adjusts resource allocations in order to maintain application service levels. On its own, VMwares software cannot do this and needs to be integrated with third-party storage and networking hardware.
Friends and family first for Cisco and EMC
Cisco and EMCs integrated software and hardware packages are called Vblocks. They will come in three sizes, ranging from around 300 to over 6,000 virtual servers, with prices starting at hundreds of thousands of dollars.
Very similar systems can already be assembled by combining VMwares software with other suppliers products such as IBM or HP servers, HP network switches, or IBM, HP or NetApp storage. Cisco and EMC say they will not turn away customers who want to continue using that rival equipment, but obviously the purpose of their joint arrangement is to promote Vblock ahead of any alternatives.
Cisco and EMCs rivals cannot try to counter this by lowering their support for Ciscos networking gear or VMwares software, because those two technologies are so popular with customers. For example, when Cisco made its move into servers, IBM stepped up its relationship with Ciscos networking rivals Juniper and Brocade, but it certainly did not stop reselling Ciscos switches. This fact reflects the strength of the combined products of Cisco and EMC. They hugely dominate the major infrastructure areas of server virtualisation and data centre networking.
Cisco and EMC almost dovetail
Cisco and EMC are already relatively close, as demonstrated by Ciscos ownership of a very small stake in VMware, which it gained when EMC sold around 10% of VMware to a number of investors in 2007. The only overlap between Cisco and EMCs products and services is in the area of network management, where EMC has been building up its Ionix-branded business. Losing a small amount of Ionix revenues will be a small penalty for EMC to pay if the alliance with Cisco fortifies VMware against Microsofts server virtualisation software. The latter is steadily becoming more competitive, and will eventually challenge VMwares position at the core of data centre virtualisation.
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