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Fortune 1000 in Cisco California rush

Sachs survey shines on Cisco

In what will surely bring a smile to John Chambers - Cisco's chairman and chief executive officer who is counting on UCS to be a profitable - only 17 per cent of the respondents said that the price of the hardware was a key factor in the adoption of UCS products, which Jankowski said suggested "a feature-rich product offering from Cisco may enable the company to sustain above industry margins for the product."

Among those polled, 21 per cent cited features as being more important, while performance was cited by 18 per cent. So don't think price is that far behind, Cisco. Vendor and component reduction should have been higher on the list, given the UCS sales pitch, but only rated 12 per cent and 11 per cent respectively, and ease of use was only cited by 11 per cent. (OK, so maybe now is not quite yet a time to be smiling at all. Maybe this AS/400-style sales pitch is not quite sinking in yet).

If there are two causes for optimism for Cisco as it enters the cut-throat server arena, it is that based on the Goldman Sachs poll, a third of the IT executives said they would not be able to evaluate the UCS product because of budget constraints. If the economy improves, that can - and almost certainly will - change. Moreover, only 20 per cent of those surveyed said they were uninterested in UCS because they were already happy with the products that their server suppliers provided.

Still, optimism about UCS must be tempered by the fact that 14 per cent of those polled said they don't expect the California boxes to be competitive on price (regardless of the ease of use, consolidation, and other capital and operating expense savings Cisco is going on and on about) and 13 per cent say they are outright skeptical of the product and its vision. Another 12 per cent said they would wait for UCS 2.0, thank you very much.

As converged enhanced Ethernet and the subsequent convergence of server and storage networks becomes more normal, Cisco could get better traction. But then again, the server makers are not just sitting still and letting Cisco take the money. They have their own plans for preserving their own revenue streams, and they will fight for every dollar, pound, euro, yen, yuan, and ruble. Count on it.

On a related note, the latest GS IT Survey also includes the latest IT spending index, which fell to 26 in April, down from 29.5 in February. The IT capital index, which looks only at new spending on gear, actually rose to 25 in April from 26 in February. By way of reference, anything above 60 on the index means the IT market is expanding, and in late 2007, as the recession was just starting, both indexes were north of 75.

They crossed the 60 barrier in late 2008 and fell at an appalling rate in the second half of 2008 and into 2009. "This is the first upward move in either of the indices since June 2008, contributing to the view that our indices are likely nearing a bottom at very low levels," Jankowski said in the report. ®

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