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Cloud enablement

What Cisco Won't Buy

5:45 PM -- Cisco Systems Inc. (Nasdaq: CSCO) and Dell Technologies (Nasdaq: DELL)? I don't buy it.

Granted, it's an outlier. A Mercury News column over the weekend listed 10 predictions for Silicon Valley -- your usual New Year's kind of story for the Sunday business section -- and added a longshot as the tenth one.

And seriously, kudos for that. Most of the other nine were pedestrian: Intel Corp. (Nasdaq: INTC) settling its legal squabbles; Facebook not going public; Apple Inc. (Nasdaq: AAPL) actually producing the mythical tablet. But a list like this ought to generate some conversation, so Cisco/Dell got added at the end.

The theory is that, as Cisco competes more closely with HP Inc. (NYSE: HPQ), Cisco will need to look more like HP. Add to that the fact that Dell has been struggling, and you have an M&A recipe, right?

Thing is, Cisco insists it doesn't make business moves just to match a competitor. That's not a literal truth; Cisco sometimes makes acquisitions to fill product gaps -- gaps created by the fact that someone else sells the stuff. (You could put Starent in that category.) But when it comes to long-term strategy, I think Cisco does stick to that creed.

CEO John Chambers seems to think Cisco is transmogrifying into a new type of company entirely, something that's at the next level of evolution beyond Cisco the Router Company. Mimicking someone else doesn't jibe with that plan, especially when we're talking about HP, which isn't the role model it once was.

It's true that Cisco likes the idea of offering complete packages. A prime example would be its Unified Computing System (UCS) for almost the entire data center. But UCS leaves out the storage itself -- because storage is too vanilla for Cisco to exploit.

Servers and PCs seem to be in the same position. Yes, UCS famously includes Cisco's first servers, marking direct competition with HP, but I don't think it logically follows that Cisco would want to run a full-scale PC business. It's fun to think about, though.

— Craig Matsumoto, West Coast Editor, Light Reading

Pete Baldwin 12/5/2012 | 4:45:22 PM
re: What Cisco Won't Buy

Yeah, the IBM theories seem much more likely.  Brocade now says it was never up for sale (during the whole HP brouhaha).  Juniper, as it gets more closely knit with IBM, might be a possibility -- but either purchase would mean IBM gets back into networking equipment, an area that Cisco itself says is going to get increasingly commoditized.  It will be interesting to see if IBM is eager enough to do that.

ChiefTestPilot 12/5/2012 | 4:45:22 PM
re: What Cisco Won't Buy

Agree... It would be a super long shot for Cisco to buy any of the top server guys.. However, you will see a server company buying a networking rival of Ciscos's this year.. 


There will be another HP/3com.. Most likely IBM buying Brocade or Juniper perhaps..


Should be an interesting year..


CTP


 


 

Pete Baldwin 12/5/2012 | 4:45:21 PM
re: What Cisco Won't Buy

Chambers has said it repeatedly for at least three years (and still does): he expects the hardware franchise to get compromised more and more by low-cost competitors, particularly from Asia. 


Later today, when i've got more space to breathe, I can dig up an LR story link as evidence.

rahat.hussain 12/5/2012 | 4:45:21 PM
re: What Cisco Won't Buy

craig,


cisco source for the quote "networking equipment ... is going to get increasingly commoditized"?


odo


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