The markets just jumped on the back of a good earnings report and good guidance from Cisco . John Chambers has described how the company has become more than just a networking company. The vision he has put forth ranges from Internet infrastructure, enterprise networking, consumer products, TV set-top boxes, various kinds of software and more.
It has been noted that Cisco has invested in the VMware IPO. It is less well known that Cisco has plans for taking over the datacenter itself. Cisco envisions the eventual replacement of local devices with shared network resources. This is a trend that is underway already with the advent of storage area networks and network attached storage, both essentially comprised of banks of disk drives that can be flexibly deployed as needed. Server virtualization as implemented by VMware and others has become the next major advancement in abstracting datacenter devices into a resource pool configurable by software.
Cisco has begun to define the capability to control resources in the datacenter by looking inside the packets of data that are flowing between devices. In this way, management software can more precisely determine what specific piece of hardware is being utilized. With their networking expertise, Cisco has developed deep capabilities around data packet processing.
As a first step, Cisco has released the VFrame Data Center, virtualization management software that is supposed to be able to control network, server and storage resources as virtual services. The product has an API that developers can use to extend its capabilities. In many ways, it looks like Cisco is competing with both EMC and VMware.
Ultimately, it appears that Cisco is looking to extend the paradigm of distributing processing resources across a network fabric. It has already been done with storage, the final step is distribute CPUs and memory across the network.
Cisco is working to extend their reach from the "plumbing" between devices to making good on its promise that the "network is the system". In this new world, discrete servers will be obsolete and network appliances will be combined and configured to create processing capabilities on-demand. And Cisco will be in the middle of it.
Disclosure: CSCO is in our model portfolio
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