Cisco: Skepticism Abounds About Foray into Servers
Seems the more the Street thinks about Cisco Systems’s (CSCO) announcement Monday that it will sell servers, the less the Street is inclined to be enthusiastic. As I noted Monday, Cisco is expected to lose current revenue from partners Hewlett-Packard (HPQ) and IBM (IBM) as it comes into deep competition with both. And the effort Cisco will need to make to actually be successful in selling a server against both vendors seems somewhat formidable–however enthusiastic Cisco is about its server, dubbed the “Universal Computing System,” or UCS.
JP Morgan’s Ehud Gelblum sounds the most skeptical of the lot. His colleague Mark Moskowitz, who covers HP and IBM, today put out a note saying that it’s going to be pretty tough for Cisco to put together the necessary software and services to match the top vendors of servers. Gelblum agrees, but he’s more interested in what seems to be a rather skimpy return even if Cisco does succeed.