I stumbled upon an interesting article on NYtimes about Cisco venturing into the server market. Make no mistake, server market is crowded with marginal profits. Here is what Cisco has to say about their new endeavor:

Cisco executives played down the potential for serious conflict [with other server vendors]. “We see this not as a new market, but a market transition,” said Padmasree Warrior, the company’s chief technology officer. “Any time there is a major transition occurring, there will be large companies that have to compete in some areas.” The technology driver behind this transition, according to Cisco, is virtualization software.

Hmm… because of virtualization, Cisco is going into the server market? Not sure if I’d buy into this theory. However, I do like the notion of more server vendors.

Honestly, I don’t think Cisco will survive in this new market. why? Cisco brand stands for solid products at a higher price. In other words, higher margin products with good quality - a non-existent in the server market.  Also, Dell rules the server market - due to the economy,  more and more companies are turning to Dell for their server needs. My friend David puts it elegantly by comparing Dell to Trabant - It works, but feels and looks  cheap [check out my tweets].

Here is my recommendation for Cisco to not only survive, but thrive, in the server market. Buyout Sun Microsystems to take over their hardware division, and let Sun manage its software division. Why?

• Make no mistake, Sun got some amazing technologies, but never got the credit they deserve.
• While Dell is the Trabant, Sun is the Toyota of Servers - exceptional products with better quality, which could eventually provide higher margins.
• Cisco’s strength is marketing, which Sun seriously lacks.
• If there is one company that could threaten Google and Amazon’s cloud computing, it is Sun. Sun pretty much has the necessary software components to rival Google and Amazon. Cloud computing is the  future and Sun will help Cisco to get there.
• Sun already has top-notch client base.
  
• CIOs and CTOs would love this merger and would welcome with open arms.
  

My prediction (rather wishful thinking) is that someone is going to buy Sun - I am passionate about their software products and would like them to live on.