DOW JONES NEWSWIRES
Cisco Systems Inc. (CSCO) outlined a bold plan to establish a
bigger presence in the market for computer hardware and the systems
used by businesses to run their information-technology
networks.
The announcement - which was expected - comes after months of
speculation in the technology industry. Cisco already is a dominant
player among makers of networking gear used to connect computer
systems. But the company is now looking to expand into other areas
- such as blade servers - at a time when business customers are
demanding simpler, less expensive systems.
Cisco's new initiative promises customers up to a 20% reduction
in capital spending and up to a 30% reduction in operating
expenses, greater energy efficiency and improved
information-technology productivity.
Among the companies joining Cisco's effort include VMware Inc.
(VMW), Red Hat Inc. (RHT), EMC Corp. (EMC) and BMC Software Inc.
(BMC).
Industry and financial analysts have been speculating for months
on what Cisco is up to, including much chatter on a reported plan
to sell blade servers - the thin computer boards used to run data
centers and sold by vendors such as Dell Inc. (DELL),
Hewlett-Packard Co. (HPQ), and International Business Machines
Corp. (IBM).
The buzz over Cisco has grown louder for a number of reasons.
The corporate tech market is consolidating, and with its huge cash
pile of roughly $30 billion and quest for growth beyond its core
networking business, Cisco is well positioned to shift the market
based on its own needs.
Cisco shares were recently up 3 cents at $15.54. The stock is
down just 4.7% so far this year.
-By Mike Barris, Dow Jones Newswires; 201-938-5658;
mike.barris@dowjones.com