Cisco's rack server intensifies competition, increases market

Cisco's new C-Series rack server intensifies its competition with data center server incumbents HP and IBM, and significantly increases the market opportunity to Cisco. Cisco unveiled the C-Series rack mount server for its Unified Computing System platform this week.

In a bulletin on the C-Series announcement, Oppenheimer & Co. analyst Ittai Kidron says the rack servers allow Cisco to drive its UCS systems and servers through a greater number of channel partners. Most of the rack-mounted server market is driven through channels as opposed to direct sales, Kidron notes, "playing into Cisco's competitive advantage."

He says with the C-Series, Cisco's addressable server market has now grown to $15 billion annually from $5 billion previously with just the B-Series UCS blade servers.

Kidron also says the rack servers increase competition between Cisco and HP and IBM. In his bulletin, he states:  

Cisco should now be viewed as a much broader player in the server market, more directly competing against key server players such as HP and IBM. Cisco's server products now have greater overlap with HP and IBM's server businesses, and we expect both to continue to expand their networking product portfolios and partners accordingly as they all aim for a larger piece of the next-gen data center opportunity. Juniper should further benefit from Cisco's actions.

IBM also now OEMs Brocade's Foundry Ethernet switches, and some expect HP might do the same. HP, as expected, reached an OEM deal with Brocade this week on Brocade's 8000 FCoE switch; and HP and Mellanox also disclosed an OEM arrangement for HP to resell Mellanox's Infiniband data center switch, further distancing HP from its data center connectivity ties to Cisco.

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