EMC, VMware and Cisco announce a joint venture featuring VMware's virtualization software:
Cisco and EMC Form Venture to Serve Data Centers
By ASHLEE VANCE
New York Times
November 4, 1009
Cisco Systems took another step to expand its computer hardware businesses on Tuesday by forming a broad partnership with EMC, a maker of storage equipment and software.
The two companies announced Tuesday that they have created a joint venture called Acadia that will work to sell their data center equipment to businesses. The new venture will focus on designing and building systems that rely on virtualization technology, which can help customers create a more flexible technology infrastructure and lower their capital spending costs. For Cisco, the arrangement should aid the company’s efforts to sell its nascent line of computer servers and increase competition against the likes of Hewlett-Packard, I.B.M. and Dell.
Cisco has long been the dominant supplier of networking equipment like switches and routers for corporate data centers. But, earlier this year, the company expanded into the computer server market as well, placing it in direction competition with traditional partners like H.P. and I.B.M.
According to analysts, the partnership with EMC should lend some credibility and reach to Cisco’s server aspirations.
"You will see us joined at the hip," said John T. Chambers, the chief executive of Cisco, during a telephone interview.
The two companies, along with VMware, a majority-owned subsidiary of EMC, will create pre-built bundles of hardware and software. These packages will include networking and server gear from Cisco, storage and security software from EMC and VMware’s virtualization software, which lets customers run numerous applications on individual servers.
The bundles are reminiscent of the mainframe era, when customers would buy large, unified systems that handled most of their computing needs. After years of disaggregation due to the rise of PCs and servers, equipment suppliers have recently been pushing customers back towards a a model in which customers spend larger parts of their technology budgets with one company.
H.P. and I.B.M. have relied on their own products and services organizations to build these bundles for customers. Now, Cisco and EMC will work together through Acadia to create similar offerings.
VMware and Intel have also made minority investments in Acadia, said Joseph M. Tucci, the chief executive of EMC.
Cisco and EMC said they expect customers to build "private clouds" with their technology. This phrase refers to the increasingly popular cloud computing model, where individual users tap into online services delivered via a data center rather than running software directly on their PCs. In a private cloud, a company uses its own data center to create these types of services for employees and to divvy up computing resources between different divisions.
Along with servers, Cisco has been looking to expand into a wide variety of new businesses as it tries to grow the company’s revenue. In the past month, Cisco has made a pair of $3 billion acquisition bids — one for the video conferencing specialist Tandberg and one for Starent, a telecommunications equipment maker.
The Tandberg tender offer has met resistance from some shareholders, who are pressing for a higher price. Cisco said Monday, “We strongly believe our offer is a very good price for Tandberg shareholders.”
Cisco shares were down almost 2 percent in midday trading, and EMC shares were off about 1 percent.
Copyright 2009 The New York Times Company
New York Times story link |
