| SAN JOSE, Calif. — With the release of a | | | | servers, storage systems and networking equipment, |
| footrest-size product, Cisco Systems has disrupted | | | | which must now deal with more fluid virtual |
| the political ties among the world’s largest | | | | applications rather than dedicated software. |
| technology companies and thrust itself into a new, | | | | With its Unified Computing System, Cisco bundles |
| hostile market. | | | | server, storage and networking systems in a single |
| Cisco ended months of speculation by revealing its | | | | product. Cisco says it can run hundreds of virtual |
| first server computer at the company’s | | | | servers on a single machine. |
| headquarters here. The product encroaches on the | | | | Analysts said the product is the biggest strategic |
| turf of Cisco’s traditional partners like | | | | shift in the server market to occur in years. “This |
| Hewlett-Packard, I.B.M. and Dell, which have sold | | | | is definitely a transformative play,” said James |
| billions of dollars of computers over the years that | | | | Staten, an analyst at Forrester Research, who |
| flank Cisco’s core networking hardware, routers | | | | attended the Cisco news conference. “This is |
| and switches. But John T. Chambers, the chief | | | | war and a direct frontal assault on I.B.M. and H.P.” |
| executive at Cisco, insisted the time was right for | | | | Analysts expect that the major server makers will |
| the company to turn more aggressive. | | | | release similar products soon. |
| “What we are really talking about here is | | | | While servers are far less profitable than networking |
| catching the next market evolution,” Mr. | | | | equipment, Cisco has worked with software makers |
| Chambers said, during a news conference. | | | | like VMware and BMC to sell software and hardware |
| The New York Times reported Cisco’s plans in | | | | together in order to command some of the highest |
| January. | | | | profit margins in the server industry. |
| Mr. Chambers said the rise of virtualization software | | | | H.P. has already responded to Cisco’s actions by |
| has created the need for new types of server | | | | increasing its investment in networking equipment, |
| computers. Virtualization software, made popular by | | | | Cisco’s core business, and refining its virtualization |
| VMware, lets businesses run more software | | | | technology. |
| applications on each physical server, helping them | | | | A version of this article appeared in print on March |
| save on capital costs. | | | | 17, 2009, on page B6 of the New York edition. |
| Virtualization also muddies the boundaries between | | | | |