Cisco Moves to Take Over the (Data Center) World

This week Cisco made two very powerful moves to secure a top position in the data center market. Earlier in the week it was reported that Cisco will purchase Neopath Networks and just today they have announced they will acquire WebEx.

So, why would a hardware manufacturer purchase two software companies? Well, there's a couple of reasons. Let's look at them a little bit closer.

Infrastructure Sprawl Will Slow
We've reported a couple of times on the cost of corporate data center expansion, including the fact that some companies are even moving their data center operations to remote parts of the country to escape expensive land, construction, and power costs. That's a great option for those that can afford it. However, many businesses simply can't. So more pressure is being placed on them to get more out of their current infrastructure. Virtualization technology will continue to help them accomplish this, but we know what vitrualization will do to power demands. Therefore, Cisco will see sales from hardware slow as infrastructure sprawl slows.

Net is the Platform
The dawn of the network as a platform is upon us. I'm sure anyone can generate a list of a dozen enterprise applications that run on the network and more are on their way. These acquisitions bring the total to 7, just this year, for Cisco. Proving they have every expectation of furthering the  concept of net based  productivity tools.

What do you think? What can you add to this list?

Comments

[Matt]

I don't think infrastructure growth is going to slow down, despite server virtualization. Virtualization is a one time fix -- consolidating outdated 1-u servers running non-critical apps. It'll be a blip on the trend line of server infrastructure growth.

Pretty soon virtualization is going to be a standard operating system feature on all low end servers -- just like virtualization has been a standard feature on the mainframe for decades. Virtualization hasn't slowed down the demand for mainframe MIPS and it won't slow down the growth of x86 server sprawl either.

The increase in available bandwidth means people can and will do more -- the exponential increase in demand for CPUs is going to trump the gains of server virtualization in very short time IMHO.

[Chris Gandolfo]

I think there is a fine distinction to be drawn between growth and sprawl.

Implementing virtualization in an existing data center to gain 20% or 30% processing power from your 1u servers is growth, in my opinion.

Sprawl would be ignoring virtualization as an option and building a new facility in order to get that 20-30%.

I think more corporations are looking for a way to squeeze every last ounce of processing power from current infrastructure before they turn to the much more expensive route - new construction.

[Holly Wild]

Makes sense... acquisitions for Cisco business is the building block for Cisco’s future growth and competitive edge.