Cisco-EMC partnership deepens with a new company in the works

By Allan Tan | Sep 3, 2009

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On Sept 3, the Wall Street Journal published a story claiming that networking giant, Cisco, is in talks with storage juggernaut, EMC, to form a joint venture (JV) that will market, sell and install systems for very large enterprises.

Code named Alpine, the JV will sell Cisco's Unified Computing System (UCS) servers and EMC's storage arrays. Between the two vendors, they bring nearly everything needs to design and build data centers. The new JV will pick the requisite skills from each of the vendor's services division. In 2008, Cisco reported net revenue of US$7 billion from services. EMC's 2009 services business is reported to be US$4.8 billion.

Should this worry IBM and HP? It better! At least in the long term.

HP and IBM are two of Cisco's largest customers, bringing in roughly US$2 billion annually in networking gear. But Cisco's recent entry into the server business has earned the irked of both server vendors. EMC has always had a love-hate relationship with the two server vendors because they all sell competing storage arrays and services across "almost" the entire range of storage boxes.

Will this new venture succeed? There is a good chance. Large enterprises do not like buying from small vendors because these organizations typically depend on IT to run the business. So a good brand pedigree is requisite in many of the purchasing decisions. With the exception of the still to be battle-tested UCS, both Cisco and EMC are household names in their respective markets.

It would be interesting to see whether one buys the other in the process of the joint venture. Rumors have been running around for years that EMC would buy Cisco, and vice-versa.

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