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Cisco (Nasdaq: CSCO), the dominant maker of routers and switches, appears to have designs on the blade server market. It has begun working on its own virtualized technology code-named "California Server," according to The New York Times.
It is said to run on Intel (Nasdaq: INTC) processors and Cisco's own Nexus switch.
Details are murky, but questions are plentiful: For instance, there is speculation as to whether Cisco is planning a general-purpose blade server or one designed for a specific use case, such as telephony.
Cisco did not respond immediately to a request for comment by E-Commerce Times.
Time for Bold Moves
How wise this move will be -- if it is true -- is a point of debate. Cisco will be entering a space in which it does not currently compete and does not have a track record -- a space that is already dominated by well-established companies such as HP (NYSE: HPQ), Dell (Nasdaq: DELL) and IBM (NYSE: IBM).
None of those companies is going to be inclined to give up market share without a fight -- especially now, with hardware and related products not selling well. Cisco can expect tough competition on pricing and service if it does indeed try to establish a foothold in the blade server market.
It is the suffering economy and the need to expand and diversify, however, that lends credence to the rumors. Cisco may believe that conditions warrant the risk entailed in making a bold move into the US$67 billion market.
Smart Move
The strategy 
makes sense for Cisco, despite its risks, said Charles King, principal of Pund-IT.
"Cisco has increasingly built IT management capabilities into network offerings. In particular, I am thinking of smart switches leveraged by companies like EMC (NYSE: EMC) to handle storage and information management solutions," he told TechNewsWorld.
"Also, the Intel-based server market is one where there is a lot of latitude for companies to get involved," he continued. "Frankly it is hard to tell the difference from one Intel server to another."
Going after the virtualization part of the server market is also smart, because that is the easiest way to compete with HP, IBM and Dell, added King.
"It would also be a bit of tit for tat. Under Hurd, HP has built out its own networking hardware, and this may be a simple statement of recognition on Cisco's part that if vendors like HP can create competitive products, then [Cisco] can turn around and do a good job of producing industry standard servers."
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