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Cisco moves into the data center: Who are the winners and losers?

Cisco on Monday rolled out its long-awaited vision of data center architecture, including multiple partners, a wire-once approach to link computing, virtualization, storage and networking and a call to lower costs. Let's assess the winners and losers of this rack-by-rack data center battle.

This is a guest post from Larry Dignan, Editor in Chief of ZDNet, TechRepublic's sister site. You can follow Larry on his ZDNet blog Between the Lines (or subscribe to the RSS feed).

Cisco on Monday rolled out its long-awaited vision of data center architecture, including multiple partners, a wire-once approach to link computing, virtualization, storage and networking and a call to lower costs. Let's assess the winners and losers of this rack-by-rack data center battle.

See also: ZDNet's coverage of the press conference and Cisco's official statement

As background, Cisco's Unified Computing System aims to unify components of the data center into one footprint. The goal is to cut the total cost of ownership by 20 percent in capital expenses and up to 30 percent in operating expenses.

How did Cisco reach those savings figures? A Cisco spokesman said capital expenses will fall because fewer switches, adapters and cables are needed. Cables represent 15 percent of data center capital expenses. Cisco's architecture only has one cable going in. The set-up is also expected to lower power, cooling and labor costs. Meanwhile, one management application can manage the entire system compared to seven with legacy systems.

As expected, Cisco also launched blade servers that are based on Intel's Nehalem processors. Cisco's design aims to create a single system that wires the blades and consolidates networking functions (local area, storage area and computing networks).

Cisco's has taken a holistic approach to data center architecture and the ramifications could be big over time. However, the effects won't be felt overnight. Cisco noted that it doesn't expect a rip and replace of existing data center infrastructure in favor of its Unified Computing System. That said, Cisco will plan to win rack-by-rack as data center assets are replaced.

Here's a look at the potential winners and losers:

Winner: Data center managers looking to find more productive uses for cable jockeys. For all of the moving parts of Cisco's Unified Computing Center announcement for IT execs it really boils down to two words: Wires and cables. All of those wire and cables cost you money. Cables equal labor costs and Cisco's new architecture has one wire going in.

Instead of this:

You have this:

Cisco is trying to bring sexy design to the data center. Jim Grant, BMC's senior vice president of strategy and corporate development said the better wiring means IT managers can "wire once and reconfigure many in logical way rather than physical."

Loser: Competitors that will need to bolster their data center architecture plans. In a blog post, Cisco said that its data center move is to add value and not take on entrenched players.

Cisco said:

This is not the ‘Clash of the Titans’ or us ‘coming after HP or IBM or Dell’. Some companies may choose to join us in this market, others may continue to operate the status quo.  We are certain over time we will not be alone in this market.

But Cisco's design work here is substantial. As Cisco gains its footing and begins rack by rack warfare customers are going to start asking about the Unified Computing System approach. Other data center rivals will have to start answering questions about integration between functions, architecture and the potential savings. If anything just the buzz associated with Cisco's move can dictate the conversation.

Winner: BMC Software. BMC and Cisco collaborated on the management software portion of the Unified Computing System. This deep integration means one app can manage the system. For BMC, the Cisco partnership "is preferential," said Grant. BMC, which is already entrenched in data centers, will find itself in all of those next-gen data center conversations. Winner: Intel. The chip maker gets its Nehalem processor to ride shotgun on the Cisco news. The positioning of Nehalem and next-generation data centers will be hard for AMD to match. Loser: Hewlett-Packard. There are a few items to ponder here. On the hardware side of the equation, HP may see blade server margins squeezed. HP is also battling back with its networking gear. But there's another hook here that may be overlooked: HP's own automation and management software. HP acquired Opsware and the capabilities are similar to what BMC offers. Now that Cisco and BMC are partners on sales calls it could be more difficult for HP's Opsware. Winner: VMware. As part of Monday's announcement, Cisco and VMware announced an original equipment manufacturer agreement. VMware, which is under fire from the likes of Microsoft, Red Hat and Citrix, gets another channel to push its virtualization platform. Cisco is a nice partner to have on board. “This is perhaps the only evolutionary road,” that is feasible right now, said Paul Maritz, the chief executive of VMware, that could lead to “revolutionary” new forms of computing. Loser: Brocade. Brocade made a big move to acquire Foundry Networks to push its own data center vision. Cisco's announcement will put pressure on Brocade to position its version as an alternative. Meanwhile, EMC is another big Cisco partner on its Unified Computing System. Winner: Cisco. The company has the message and the business case to make a go of its Unified Computing System. In many respects, the company has changed the data center conversation and managed to crowbar itself into more discussions as infrastructure is replaced.
7 comments
Photogenic Memory
Photogenic Memory

No one is spending money. And those figures look awfully fake. I'm no expert on factoring cost cutting solutions for IT but I can spot "clever" marketing easily. Cisco wants to move into a new cash generation spot. The way things are currently going; there needs to be actual incentive to get people on the Cisco train. Also can this higher level of service be sustained properly. For instance, will profit gain overcome the expense for the added tech support infrastucture for the new product(s). Will they go for the India route and off-shore support instead like so many others? Many questions indeed. Overall, it's a good idea and will eventually succeed in a better economy.

tomm
tomm

Cisco is more powerful then both HP and IBM put together. Cisco's reputation is 10 times what the others are.

ggbyrne
ggbyrne

I think much depends on their approach to the support of both the hardware and software needed to execute their vision. If they take the approach they have of SmartNet being a combination of both hardware break-fix and software updates - they may have a difficult time competing against the more open and flexible options available from the current big players. Maybe IT managers will be seduced by the supposed savings on cabling, but in todays economy not only are new procurements difficult to justify, but new procurements that lock clients into a costly maintenance contract are going to be a tougher sell.

fixitsteve
fixitsteve

I agree that Cisco can only win here. The way that Cisco mainly operates is through large revolving leases. They can squeeze these leases to encompass more and more, with little uptick in cashflow. 'We do your security, core, distribution, and FC, how about the whole thing for $1000 more a month? We'll also reduce your energy costs and consolidate management." Could be compelling to many.

Craig_B
Craig_B

This all sounds great, as does all marketing. Can Cisco deliever at an effective price point? This may make sense in large organizations however I don't see a lot of spending by anyone these days.

gjlowes
gjlowes

The CISCO advance in to the data center is a brilliant "customer-back" strategy, backed by a well-reasoned and executed plan. Adopting the CISCO vision provides both immediate and long term advantages. In today's tight economic climate, the promise of 20% to 30% savings across numerous expense categories is difficult to resist. Longer term, when married with VMWare the CISCO vision allows customers large and small a viable and cost effective alternative to both IBM and HP. Such heightened competition can only be good for consumers, even those who do not choose CISCO. In addition, innovative evolution to the exploitation of data center & newtork virtualization has the potential to positively change the fundamentals of the IT technology market. Perhaps the question could be posed differently: Can IBM and HP compete with CISCO?