Blades still represent only about 13% of the total server market in units.
Cisco is rising in the quadrant.
Here are figures for server form factor revenue and units from 2009 through 2011 (the 2011 values are based on first-quarter through third-quarter results only):
- Rack blade servers shipped 13.5% in 2009, and had a total vendor revenue of 19.98%. In 2010, 13.1% shipped, and total vendor revenue was 19.85%. In 2011, 12.5% shipped, and total vendor revenue was 20.86%.
- Rackmountable servers shipped 14.7% in 2009, and had a total vendor revenue of 11.08%. In 2010, 13.0% shipped, and total vendor revenue was 9.09%. In 2011, 12.3% shipped, and total vendor revenue was 8.44%.
- Rack-optimized servers shipped 59.2% in 2009, and had a total vendor revenue of 59.91%. In 2010, 63.0% shipped, and total vendor revenue was 64.09%. In 2011, 64.0% shipped, and total vendor revenue was 64.11%.
- Tower/stand-alone servers shipped 12.5% in 2009, and had a total vendor revenue of 9.03%. In 2010, 10.9% shipped, and total vendor revenue was 6.97%. In 2011, 11.2% shipped, and total vendor revenue was 6.59%.
Dell's third-place position is now under assault by Cisco's recent entrance into the market. Cisco's entrance into the market is causing re-evaluations among the installed bases and channels of established blade market vendors.
Cisco
While maintaining a strong and viable presence in the networking infrastructure of most data centers, Cisco's track record as a blade server vendor is relatively young. The company entered the market in 2009 via technology gained as a result of acquiring switch vendor Nuova (which was already funded by Cisco at the time to develop the Unified Computing System (UCS) platform and Top-of-Rack (ToR) technology). Cisco's UCS is highly innovative, and is targeted at highly integrated and virtualized enterprise requirements, along with a growing focus on cloud and other service providers.
The UCS architecture differs from that of other vendors by deploying the ToR switch as a management server, which is able to assign virtual personalities to the blades that become automatically provisioned on installation. Other vendors need to deploy a subnetwork to achieve a similar result. UCS, therefore, becomes a form of integrated system where part of the total platform is networking-based, rather than computing-based. While blades represent most UCS shipments, Cisco has a strategy to extend UCS Manager to include blades and racks, eliminating management barriers between form factors.
Cisco's growing server market viability continues to test the relationship between it and most other server vendors. The company is a founding member of the Virtual Computing Environment (VCE) alliance, which has developed into a joint venture funded primarily by Cisco, EMC and VMware, with additional minority funding from Intel. VCE is responsible for engineering a vertically integrated solution based on UCS called Vblock that targets multiple workload requirements for a highly integrated converged infrastructure platform.
Cisco has also developed similar vertically integrated solutions with NetApp (FlexPod), Citrix (VXI) and other vendors to target specific, end-user workload and application needs. While still relatively new to this market, Cisco has created a great deal of awareness, and is aggressively driving its blade strategy to increase wallet share in accounts where Cisco has established a strong influence. Cisco has started to openly disclose its UCS results during 2011, and over the first three quarters of 2011, achieved a clear No. 3 market position in North America that contributed 65% of total revenue in 2Q12 (Cisco and Dell compete for global third place in blade shipments based on units and revenue).
Strengths
- Cisco is a global corporation with a presence in most data centers, due to its strong market share in networking.
- UCS is a fabric-enabled, enterprise-class platform with good integration of networking, virtualization, management tools and storage.
- Solutions like Vblock and FlexPod provide Cisco with cross-selling opportunities to the broader, combined installed bases of partner organizations, such as EMC, NetApp, Citrix and VMware.
- Cisco has strong partnerships with virtualization and management tool vendors, as well as the emerging categories of cloud and other service providers.
Cautions
- Despite a strong data center pedigree, Cisco has to work to overcome a lack of server product history, server market track record and installed base to leverage.
- The company's strategy is dependent on alliances with management tool vendors and storage vendors to create a complete offering.
- Strategic alliances with key OS and application vendors are relatively untested in an environment where Cisco is a server vendor.
- Cisco has not yet established a recognized presence in the rack-optimized server market; this limits its perceived addressable reach primarily to the blade market, rather than the broader market scope of more established server vendors with more extensive product portfolios.
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