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Cisco's California sales on the double

400 sees gold in them thar servers

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With business brewing again over at networking giant Cisco Systems and poised for a recovery in spending on networking, the company's competitors in the server racket - mainly Hewlett-Packard, IBM, and Oracle - were perhaps annoyed to see that Cisco's "California" Unified Computing System blade and rack servers are continuing to gain traction in the market.

In a conference call yesterday with Wall Street analysts, John Chambers, Cisco's chief executive officer and chairman, said that the UCS gear was still in the early stages of pilots and customer acceptance but showed sequential growth rates in excess of 100 per cent in the fiscal second quarter ended January 23 compared to the prior quarter. Cisco exited the quarter with 400 UCS customers, which is more than double the customer count at the end of October 2009, when Cisco closed out its fiscal 2010 first quarter.

Chambers was careful not to mislead anyone, and he said that most of those 400 customers were still doing initial implementations and pilots and that the uptake in the first couple of dozen big service providers and enterprise accounts would "determine how the next wave goes." Chambers added that it would be a couple of quarters before Cisco would feel comfortable providing any more detail on the UCS business.

The initial UCS blade servers were launched last March, consisting of blade servers using Intel's Xeon 5500 chips with converged server and storage networks running on an integrated switch derived from Cisco's standalone Nexus rack switches. In June, Cisco added a lineup of rack machines that have yet to be integrated with the blade switches, but which can integrate with rack-based Nexus switches that offer some (but not all) of the functionality of the UCS switch.

Both the blade and rack California servers were shipping late last year as Cisco, VMware, and EMC announced their Acadia partnership to peddle completely integrated and virtualized hardware stacks called vBlocks. Cisco has not divulged its plans for servers that have more than two processor sockets, but the company would be wise to have plans to get blades and racks based on the imminent eight-core "Beckton" Nehalem-EX processor out the door concurrent with its peers in the server biz.

Last fall, Soni Jiandani, vice president of marketing for Cisco's server access virtualization group, said that the company expected a faster ramp for the UCS products than for other new markets Cisco has entered in the past. Jiandani explained that when Cisco entered the LAN switching market, and it took three years to move it from a business that generated maybe $1m a month to one that brought in billions of dollars per year; ditto for IP telephony, took five years to go from nowhere to billions.

While Cisco has not put a number on the UCS ramp, it has said that it planned to have $1bn in sales for its Nexus products in fiscal 2010, and Chambers said he was "very comfortable" that these converged server and storage switches (which can run Fibre Channel storage protocols on top of 10 Gigabit Ethernet) would surpass $1bn in sales.

"In terms of the datacenter area, we're starting to win the architectural battles," Chambers explained on the call. "It isn't about standalone server technology. We have no interest in that. But with architectural plays, we're off to a good start. We've got some tough competition there, but I like the way the hand plays out." ®

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