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Cisco's New Data Center Plan Looks Promising. What Will IBM Think?

Posted by: Peter Burrows on January 28, 2008

Cisco Systems revealed a major offensive today in its ongoing assault on the data center market. And more than ever, it proposes a vision in which data centers are defined not by a computer architecture, be it mainframe or PC server farm, but around the network itself. That makes sense. After all, almost every kind of software is evolving from something that was written for a particular computing platform, into something that is written to be delivered as a service via the Internet. And not static services, either, but ones that can be adapted at a moment’s notice on a users’ whim—say, by adding a new widget to Facebook, or a new customer order on These days, the communication of information—not just the processing of information—is where the action is.

Specifically, the company announced the Nexus 7000, its biggest upgrade of the basic corporate network switch since Cisco started selling its now-ubiquitous Catalyst line in the mid-1990s. The box is so fast it can download all of NetFlix’ 90,000 movies in 38 seconds, or copy the entire searchable Web in 7.5 minutes, the company claims.

But the speeds and feeds of the new box are not the big change.

The real news is a new layer of software, called a fabric, that is designed to orchestrate the efforts of the various kinds of technology found within any data center. Rather than just oversee the Cisco gear that moves bits in and out of the building, this fabric can also be used to control the servers that process those bits, the storage gear that holds them, and the applications that do something useful with them.

If it works, Cisco would mark off a hugely strategic niche for itself, as a kind of king of virtualization. That's the name of a technology that's risen to prominence in recent years within pockets of the data center. VMWare, for example, has become corporate tech’s new darling thanks to software that lets companies spread work among all of their available servers, rather than have them sit idle waiting for their particular job to be called. In storage, gear from companies like Brocade plays a similar role. But until now, no company has figured out a way to easily coordinate these various pools of virtualized gear. With a Nexus, companies will be able to automatically create “domains” to describe a given combination of bandwidth, processing, storage and software, says Cisco senior vice president Jayshree Ullal.

It’s been a huge undertaking, she says. She first assigned 50 top techies to the job almost three years ago. Now there are more than 500 on the job. The company has spent nearly $250 million on the project—mostly on perfecting the ten million lines of code in the new software.

Given Cisco's proven ability to move into new markets and its vast cash reserves and market influence, I don't think Cisco will fail. But here’s my question: How will today’s kings of the Data Center feel about Cisco taking on this expanded role? Cisco assures me it's worked this out to everyone's satisfaction, and referred me to a number of its partners. Top executives at VMWare and Intel, for example, both said they welcome Cisco’s approach. “We don’t think it threatens us, because we work at a fundamentally different layer,” says Bryan Byun, VMWare's vice president of Global Partners and Solutions. Since virtualizing the entire data center depends on being able to virtualize the computers, “we think the two approaches complement each other.”

But what about IBM, the world’s leading data center supplier and Cisco’s most important partner in recent years. I didn’t interview anyone from IBM, and I’m sure its executives will profess support, publicly. But the basic philosophy of Cisco’s new mantra can’t help but be threatening at some level. Ullal refers to servers, storage gear and other kinds of products as “peripherals” to the real platform of the future: the network. I’m sure IBM, a company that’s spent decades designing and building corporate data centers, doesn’t see itself as a peripheral maker. And Ullal says that as Cisco settles into this new role, it will begin rolling out many new services to help companies take advantage of its technology. Makes sense, but it will be interesting to see if Cisco can pull it off without encroaching on the turf of IBM’s Global Services division. “Cisco is trying to subsume control of the IT space,” says Frank Dzubeck, president of consultancy Communictions Network Architects. “They’ve got to be stepping on [some of its partners’] toes. It’s a question of how much it hurts before they start turning to other [partners].”

No doubt, Cisco won't enjoy any clear sailing. By the time the Nexus 7000 finally ships--it's not due out for another six months--it will face increased competition. Microsoft is pushing ahead with new virtualization plans. Brocade recently introduced a box called the DCF, for Data Center Fabric. And industry insiders expect Juniper Networks to announce a new switch for corporations at a Jan. 29 press event. Indeed, Juniper CEO Scott Kriens implies that Cisco made its announcement today in part to steal Juniper’s thunder. "I'm sure they knew we were having our little party in New York [tomorrow]."

Reader Comments


January 28, 2008 12:50 PM



January 28, 2008 1:13 PM

for John at Cisco

Yasir Drabu

January 28, 2008 2:00 PM

Maybe this will easy virtualization at the network level,.Current solution let you work on optimizing a server or at most a cluster.

Need to see how it actually works!


January 28, 2008 2:52 PM

Wow insane speed i wish my PC can do that.
IBM will have something ready...


January 28, 2008 3:33 PM

Well, I guess this means I need to go eat lunch. Do you people ever read Russian newspapers? If you did you would not be sitting there reading this nonsense, you would be digging a bomb shelter in your back yard. The side benefit would be that all that digging would mean you could give up that dang expensive gym membership, at least until you finish digging. America needs to develop more domestic oil or she is going to keep funding the terrorists that are trying to bring her down. Apple rules the world!

Shoaib Ahmad

January 28, 2008 3:52 PM

I am really fed up with the decision. This can effect the youth and their career advancement. I strongly discard this step. It really sucks.

Shoaib Ahmad

January 28, 2008 3:54 PM



January 28, 2008 3:57 PM

Cisco is doing what they've always done which is innovate. I am glad to see them continue to do so. As for their partners; a little competition is good and it's the driving force behind better products. Juniper, Brocade, & IBM will have to step up to the plate and do a one up on Cisco and that ends up with the competition creating better products and being more innovative. Good move.


January 28, 2008 4:18 PM

Ai Chihuahua!!!


January 28, 2008 5:55 PM

Cisco will not lose!! They have had many waves of competition but none have been successful in taking away any significant portion of Cisco's market share. (Ciscoworks doesn't count It has always been the problem child of the family).

Alexander Frost

January 28, 2008 6:05 PM

IBM has always been better at marketing than actually creating something. Having a "corner on the market" for years due to deep pockets from government contracts, suddenly ended when compatible machines were more powerful, less expensive and not serviced by the "trained to be arrogant, IBM field service Reps of yesteryear". They eventually restructured, cut all the excess baggage loose and started marketing their "solutions", back toward the higher end clients. Cisco is famous for supplying products that actually work, when you get them. IBM is famous for vaporware products that must be upgraded faster than light travels. Microsoft and IBM are both marketing giants and sometimes stumble on products to hang their names on, which are the good stuff (even a blind hog stumbles on an acorn sometimes). Cisco has quietly filled their little niche with no complaints from anyone, the fact that they are finally prepared to supply a "next step" solution to global networking should come as no surprise and the fact that it will probably work flawlessly when they finally release it will come as no surprise either. They are definitely not a "one trick pony" and they are not a "Marketing" company which will release something way too soon, just to screw a competitor or pull the wool over the eyes of investors. IBM needs Cisco, more than Cisco needs IBM. Without Cisco, there would be no internet in my opinion. IBM and Microsoft would have some form of tin cans with string product instead, with infinite upgrades, constantly. Go Cisco!


January 28, 2008 6:11 PM

Wow didn't realize that Netflex and the "searchable" web could upload that fast. However I would still pick Cisco over IBM and Microsoft (exhaust) ....

jonny rocket

January 28, 2008 6:22 PM

IBM will call up their "matrix" and gobble up the CISCO edge.

Tex Mex

January 28, 2008 6:27 PM

Gotta love the Cisco Kid, smokin' Roy Rogers, the Lone Ranger, Lash Larue, Tom Mix, Gene Autry, Paladin, the Rifleman, and IBM. Yahoooooooo!


January 28, 2008 7:01 PM

I wondered when Cisco would find a way to introduce another layer. All it means to me is more maintenance fees.


January 28, 2008 7:08 PM

It will take IBM 3 years, they think it's 1995.


January 28, 2008 7:16 PM if only everything else was that know like your computer's bandwidth.

Hooray for bottlenecks!


January 28, 2008 7:28 PM

I guess the computer really IS the network...

scott f.

January 28, 2008 7:29 PM

Scott Kriens .. you gonna cry .. gonna run home to mama


January 28, 2008 7:35 PM

As companies start to move toward virtualization, they will understand that the network as a platform vision to manage the virtualization in the network rather than disjointed seprate applications in software. Being able to do this in hardware at lightning speed with specialized ASICs (Application Specific Integrated Circuits)screams that that evolution of virtualization is finally mainstream. Cisco has made the right investments in VMWare (150 million) and other technology to firm up it vision and strategy. Other vendors who rely on merchant silicon (standard commodity ASICS) and don't develop their own, will not be able to keep up with the fastly adapting virtualization market with features and stability.

This will have a huge impact on the medium and large size data centers which have adopted virtualization. Even as large companies cut back in in IT spending I would think that they would allocate money for virtualization strategies as a core architecture.


January 28, 2008 8:16 PM

Yeah, this makes sense. After all software based upon multiple always moving software standards never breaks.... Lets put it on the asics that control all my network traffic...Cisco will have no issue suspporting whatever SAP. MSoft, IBM, BEA, etc, etc... throw at it.. Get Real!

I respect Cisco as a networking gear manufacturer but happily never buy it anymore as it is vastly overpriced compared to it's competitors. With this new product Cisco is looking to increase it's share of the IT wallet because it seems to be losing a bit of steam in its core business. Competitors have already caught up and IT buyers have started to question their decisions to keep paying rediculous margins.

I'll take a look at their technology when it becomes reality as they always have very interesting ideas. I'm going to walk in with my eyes wide open though, 10 million lines of code.... Cisco is good, not great... check out their bug lists someday....


January 28, 2008 8:21 PM

Sooo we don't neeed no steeenking servers no more. Just switches and virtualization! Such BS!


January 28, 2008 9:05 PM



January 28, 2008 9:14 PM

Well, it's nice that it can do that in the datacenter, but the reality is that the enduser needs that performance. We'll never get it, of course, until we start paying the fees for the admins and networks who get to play with and install NX-OS. Plus, I wonder if all that Cisco ASIC technology is entirely owned by Cisco; after all, lots' of chip patents are owned by others (including IBM who own some serious labs). It wouldn't surprise me if IBM didn't give a crap if Cisco has the "new" technology on tap; they probably own some portion of patents on it and will make money anyways. Besides, IBM is all about service nowadays, so they'll just hire any Cisco cowboy and charge some crazy rate that all those large companies "cutting back on IT spending" need to invest with.
Personally, it really doesn't impress me much. What would impress me is if anyone could deliver at a residential network interface the performance to deliver 4-5 HD movies within 1 minute while streaming audio/video and websurfing 4-5 people simultaneously AND not having to pay ridiculous fees. If an NX-OX switch can do that in real life without ATT saying they need to charge 100 bucks a month then hooray! Otherwise, meh!

The VAR Guy

January 28, 2008 9:47 PM

There are Five Reasons why Cisco's data center strategy will succeed, according to The VAR Guy.

Fazal Majid

January 29, 2008 12:50 AM

You can't blame Cisco for trying to ride the virtualization bandwagon, but the key facts about the Nexus release is that they are finally coming up with a successor to the tired Catalyst line, which in many cases does not have enough switching fabric capacity to support all line cards running at full speed.

More aggressive companies like Foundry or Force10 have been gobbling up market share in the service provider space, Ciscohad to react lest their competition started making inroads into the enterprise market.

They have also drawn the same conclusion they did with the core routers, that IOS/CatOS is too old and crufty and in dire need for a rewite (which will introduce an entirely new set of problems, of course).

A core switch like the Nexus line has its hands full switching packets around, it can't do much more. The "virtualization" features basically amount to different ways of partitioning the switch for administrative purposes, not much more else. That's why the Catalyst line is stilll kept around - it will do the services like security or routing that can be devolved to the distributed edge.


January 29, 2008 1:14 AM

It's a good technology by SISCO.
But I think major companies will use more data bandwidth since the data itself inside the network, which will escalate market for the SISCO.
Can not wait to see the NEXUS DEMO !


January 29, 2008 2:11 AM

Servers are peripherals - For network.
Router/switch/serverframes all are boxes (that can suck up power and emit heat)- For the facility manaegrs.
one more step higher; these are all part of the Service that support the business.
Service is the IT.

Douglas Gourlay

January 29, 2008 2:16 AM

Just a minor clarification or so-

We are opening orderability immediately. The Nexus 7000 10-Slot Chassis will ship in a few weeks, the 18-slot in the 2H of this CY.

The reality of the Unified Fabric in the Data Center is that it is consistent with the principles we have used that make networks scalable- federated communications systems linked together with open-standards protocols.

In this case we bring the best of Ethernet, IP, FibreChannel, and High Performance Computing together greatly simplifying the overall data center architecture. Imagine if you will that changing the connectivity options of a server was a SW command instead of an outage event, cable pulling, and adding new interfaces.

We are fortunate to have pioneered many of these technologies and are now shepherding them through the appropriate standards bodies and 'right-timing' the integrated system release to market.

This truly is an important announcement for us, thank you for the kind words.


Douglas Gourlay

January 29, 2008 2:50 AM

Oh,and to the last sentence: Just wanted to launch on the first day of a quarter. It's the fiscally prudent thing to do. Didn't take into account any else's launch schedule when we did your quarterly calendar.



January 29, 2008 8:37 AM

Maybe IBM is spending too much time Ideating how to come up with a product that can compete with Cisco


January 29, 2008 2:12 PM

Finally something better than catalyst.. cisco has always been innovative but very expensive at the same time. cant wait for nexus 7000 demo..

January 30, 2008 4:01 PM

I hope this increases jobs that can be utilized in the United States.


February 11, 2008 4:34 PM

Wasn't Sun's slogan "The Network is the Computer?"

This is an example of the marketing department of a company that builds roads trying to design a car.

I hope that Cisco realizes that the network is the network, and leaving my applications and business up to Cisco just is not going to happen.

That said, this is a great marketing piece. "Look Cisco is coming out with a new switch! We'll let the switch run the applications? Good luck with that.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.



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