Cisco launches Unified Computing push with new blade server

Cisco Systems Inc. and several industry partners Monday launched an ambitious new design for data virtualization that it calls a Unified Computing System (UCS). The entire UCS relies on a new Cisco blade server which runs on Intel Corp.'s upcoming Nehalem processors.

It's an ambitious new direction for Cisco, which has not been in the server business, analysts said. Part of the UCS, however, will include a new data center switch from Cisco, an area where it has been providing switches for years.

The advantage of the new system, which incorporates Cisco UCS B-Series blades, will be the Nehalem's extended memory technology which supports movement of more virtual machines than before, Cisco CEO John Chambers said.

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Cisco Systems Inc. and several industry partners Monday launched an ambitious new design for data virtualization that it calls a Unified Computing System (UCS). The entire UCS relies on a new Cisco blade server which runs on Intel Corp.'s upcoming Nehalem processors.

It's an ambitious new direction for Cisco, which has not been in the server business, analysts said. Part of the UCS, however, will include a new data center switch from Cisco, an area where it has been providing switches for years.

The advantage of the new system, which incorporates Cisco UCS B-Series blades, will be the Nehalem's extended memory technology which supports movement of more virtual machines than before, Cisco CEO John Chambers said.

Many of the details of the UCS were not disclosed and will be announced in April, officials said.

There are 10 beta customers for the new UCS, and shipment is expected sometime in the second quarter. Analysts said they predicted the starting price will exceed US$100,000.

Chambers called the UCS a "market transition" for Cisco. "We believe that the network is at the heart of tying this all together," he said. "We look at this market as [Cisco] bringing virtualization to life."

Several Cisco officials said virtualization in data centers is not widely used, but that the UCS concept will make it less expensive to deploy, reducing both capital and operating expenses.

Monday's announcement was made on Cisco TelePresence systems in 11 cities around the globe. Officials from Intel, Microsoft Corp., VMware, BMC Software, EMC Corp., Emulex, NetApp, Novell, Oracle Corp, QLogic, and Red Hat were named as partners in the UCS initiative and several CEOs from the partner companies attended the announcement. Systems integrator Accenture was announced as a partner that will help provide services on the new UCS.

Cisco executives have said the network is the best place to tackle many of these tasks because it is the only element of the infrastructure that touches everything.

One financial analyst attending the announcement at Cisco's telepresence room in its Boxborough, Mass., offices, said CIOs and customers will automatically question Cisco's ability to maintain its new servers, even with Accenture's help. "Cisco is going to obviously be new at this," said Jason Ader of William Blair & Co.

But Ader and several other analysts said the bigger concern for Cisco is how it will market servers when its partners on large accounts include well-known server makers IBM Corp. and Hewlett-Packard Co.

"It's both a risk and an opportunity," Ader said. "There will be a battle over who controls the customer accounts." The problem is that HP and IBM have been partners on data center projects with Cisco in the past, offering their servers with Cisco switches.

Ader said Cisco will also need to adjust to seeing a tremendous drop in the gross profit margin it makes on switches with the new UCS. He said an average Cisco switch commands a 70% gross profit margin, while UCS and the new server might be half that much.

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