Network equipment giant Cisco Systems has confirmed that it will be releasing servers as the battle in the network segment switches from one to make tidy profits to one of survival as the recession bites hard.
According to the New York Times, Cisco's new server (or server range) will offer a more sophisticated virtualisation software compared to other companies out there, following its $150 million investment last year in server virtualisation specialist VMWare.
Cisco was one of the few survivors of the Dot.com bubble burst which saw so many of its rival and competitors disappear or get acquired; this time around, rather than behaving like a sitting duck, the company is aggressively pursuing new markets at the risk of, as some experts said, spreading itself thin.
Many are already questioning the move, arguing that a recession is a bad period to launch completely new product families. Institutional purchasers might be nervous about acquiring new hardware from a new kid of the block, even if the new kid is Cisco.
Furthermore, the server segment, unlike networking equipment, is already a very mature and highly competitive market and carry big names such as Dell, IBM, HP, Sun Microsystems or Fujitsu. At $50 billion a year, the whole market is only slightly more than the $40 billion in revenue that Cisco earns every year.
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Cisco could possibly be doing itself a disservice by trying to compete with what essentially amounts to affiliates, the likes of IBM and HP. Unlike Google which chose to switch off noncore services and concentrate on its core search services, Cisco believes that exploring new opportunities rather than retreating is the best strategy. After all, attack, they say, is the best form of defence.
(247 Wall Street)