HP, Cisco And IBM: Winner Takes The Data Center

IBM, said to be in talks to acquire Sun Microsystems, is showing that it will not be left behind in the battle for control of the data center, which is fast becoming the center of the IT universe.

And it's becoming equally clear that the Armageddon in the data center will be winner-take-all.

IBM is at this moment the only member of the club of diversified computing companies, that also includes HP and Cisco, that lacks a complete, end-to-end offering for the data center, where customers house their Web and application servers, storage and networking equipment.

In contrast, HP plugged a gaping hole in its technology suite with its acquisition of services giant EDS last year, while last Monday, Cisco rose up like a coiled snake from the data center floor and declared itself a player with its introduction of the Unified Computing System (UCS).

Given that Cisco had been IBM's biggest partner in the data center, and with HP having the services team to promote its own server products, "IBM was left a bit in the lurch," explained Phil Hochmuth, an analyst with the Yankee Group who follows this space.

An acquisition of Sun would provide IBM with an infrastructure for virtualized desktops, thereby extending IBM's reach from the data center all the way up to the application layer, as well as a large base of customers who share the same open source, non-Wintel philosophy as IBM's.

Moreover, IBM will no longer have to rely on increasingly uncertain partnerships to plug technology gaps. It's unclear, for instance, whether IBM will be able to count on VMware for its desktop virtualization play much longer, now that Cisco has recruited VMware as part of UCS.

Virtualization allows customers to consolidate many virtual servers onto a smaller number of physcial servers, reducing the size and power consumption of data centers. But it also introduces a great deal of complexity because of the number of moving parts, both physical and virtual, that need to be managed.

It was only a matter of time until the large vendors attempted to assert hegemony in the name of simplification, fraying their existing partnerships in the process.

Hochmuch noted that "it's not just about who has the best technology, but who can see the implementation from drawing board to actual roll-out."

The companies will therefore be sparring, not only to demonstrate that they have all the bells and whistles needed to run a data center, but that those bells and whistles will work well together. Hence the need for hegemony.

Hochmuth endorsed this consolidation strategy, telling me, "with this huge shift in data center architecture [towards virtualization], you're going to have a consolidation of network and compute technology and they're going to come together."

Data centers have traditionally been managed from the server side, but from Cisco's perspective at least, it's easier to manage that complexity from the switch. Ironically, Cisco is bringing to pass Sun chairman Scott McNealy's dictum that "the network is the computer."

Hochmuth agreed, explaining that, "to some extent, managing through the switch makes sense in a virtual environment because virtualization makes servers more reliant on the network than they were in the past."

HP, of course, would beg to differ. Paul Miller, vice president of marketing for enterprise storage and servers at HP, told me this approach is "a very myopic view by Cisco," the implication being that it's a self-serving approach given that Cisco is primarily a switch vendor.

According to Miller, Cisco's approach will cost customers money because they will be forced to change their processes by moving IT administration to the networking group.

"This is an add cost-in strategy because [IT administrators] will need to manage the data center differently than the rest of their infrastructure," he told me.

It's still unclear how IBM will approach the data center, if this acquisition occurs, but if the deal indeed takes place, "IBM reasserts they are the biggest of the bunch," said Greg Schulz, senior analyst with the Storage I/O Group.

Schulz speculated that HP still needs to shore up its networking at the high end. "They could do a deal with [switch maker] Brocade where Brocade acquires Foundry and HP enters into an OEM deal with Brocade," he told me.

IBM may not be done shopping either (and it has the wherewithal); it currently partners with Juniper for switching technology, but an acquisition may make more sense, Zeus Kerravala, another Yankee Group analyst told me.

Other niche vendors in play include Rackable, Mellanox, QLogic, Emulex and F5.

One thing vendors will have to discover is which part of the IT organization will become their buyer and champion--networking or servers. During the introduction of UCS on Monday, Cisco executive vice president Rob Lloyd said, "The money we unlock will be in the cracks between the [organizational] silos."

Kerravala noted that the same kind of split occured when customers began buying voice-over-IP (VoIP) telephony systems, as VoIP overlaps computing and telephony--which are typically different cost centers.

But what, he asked, if "there's no money between the cracks?"