Hewlett-Packard, IBM and Dell were among the familiar names at the top of IDC's list of the top server vendors for the first quarter. Even Oracle, a year after buying Sun Microsystems, has become a known entity in the server space.
However, new to the rankings is Cisco Systems, the networking giant that two years ago unveiled the first versions of its converged data center offerings, the UCS, or Unified Computing System. The solution offers a tightly integrated package of compute, storage, networking, virtualization and systems management software.
Now the company is finding its way onto IDC's quarterly server report, with the first quarter being the first time the market research firm tracked Cisco's numbers. According to IDC, Cisco captured 1.6 percent of the overall server market based on revenue, finishing seventh, nestled between NEC and Hitachi, according to Jed Scaramella, research manager for enterprise servers at IDC.
More impressively was Cisco gaining the No. 3 spot in the highly competitive and fast-growing x86 blade space, with 9.4 percent of the market. Cisco placed behind HP and IBM, and ahead by one percentage point of Dell.
Further reading
According to Scaramella, Cisco executives have been able to take advantage of the evolution of the data center toward a convergence of the infrastructure, including the servers, networking and storage, and fueled in large part by the growing adoption of virtualization.
"A couple of years ago, Cisco kind of saw [the trend toward converged resources] and saw the markets coming together ... and they wanted to get ahead of it," Scaramella said in an interview with eWEEK. "What you're seeing now is that it is starting to pay off."
Cisco partnered with such vendors as EMC for storage and VMware for virtualization, and rolled out the UCS, which immediately expanded Cisco's role in the data center and put a tremendous strain on partnerships with the likes of HP. It also helped fuel similar efforts by other vendors, including HP.
Cisco's data center business continues to grow. During a conference call with analysts and journalists to announce the company's quarterly earnings May 11, Chairman and CEO John Chambers lauded the data center business, noting that the company now has 5,400 UCS customers and an annual run rate of $900 million for UCS product orders. In addition, according to Cisco, businesses worldwide shifted 10 percent of their x86 blade spending to the UCS; that number was 20 percent in the United States.
"Cisco's rapid growth [in the x86 blade market] underscores our leadership in the industry transition to fabric computing and converged infrastructure," Soni Jiandani, vice president for Cisco's UCS business, said in a May 24 blog post on the company's Website. "We aimed to create the ideal, programmable, platform for virtualized and cloud environments, and to help solve many of the very real challenges they faced. Today's market share news demonstrates our approach is taking hold."
The IDC numbers were much-needed good news for Cisco, which has been hampered in recent quarters by a string of disappointing financial numbers and weakness in some key businesses, including its core switching and public government units. Chambers has begun an aggressive program to save $1 billion in operating expenses and streamline the business, shuttering some underperforming operations, reorganizing management and announcing layoffs that analysts say could number in the thousands.
The data center business has been a bright spot, Cisco officials have said. The numbers are beginning to show that strength.
"They've made a lot of progress in the last two years," Jean Bozman, research vice president for enterprise servers at IDC, said in an interview with eWEEK.
IDC's Scaramella said Cisco officials have done a good job at staying focused on what part of the market they're targeting-highly virtualized data centers and cloud computing environments.
"They're aiming at that," he said. "They're not trying to be everything to everybody."
However, there's still work to be done, according to Scaramella. It's good that Cisco been able to become the world's seventh-largest server vendor, but he noted that the top three-HP, IBM and Dell-account for about 70 percent of the space. The first 1 to 2 percent of the space can be relatively easy to get, Scaramella said. Growing beyond that will be a challenge.
In addition, he said Cisco needs to build out its global strategy. Currently about 60 to 70 percent of Cisco's UCS business is in the United States, and another 15 to 20 percent in EMEA, mostly Western Europe.
Research Assistant
