Through the 90’s, Cisco Systems (CSCO) was known as one of the “4 Horsemen of IT” and was even the largest company by market cap ($500 B) at the peak of the tech bubble in early 2000.   The web is the driver of all information worldwide over the past two decades, thus all recent tech trends revolve around the internet: mobilization, cloud computing, virtualization, social networking and much more.  Consequently enough, Cisco is the dominant provider of the networking gear that runs the internet.  More specifially, Cisco’s bread and butter has been the ethernet switches and overall routers markets with approximately 70% and 50% of the market share, respectively.  To sustain revenue growth, companies like CSCO must adapt to tech trends and enter new markets outside of its core business.

 Ties

On March 16th, CSCO unveiled its two-year secret project: the Unified Computing System (UCS).  This new blade server capitalizes on two key trends in IT that deliver more for less:  virtualization and cloud computing.  The UCS harnesses the power of virtualization through combining computing, networking and data storing into a single energy efficient system that can power web-based apps of cloud computing.  With this courageous move, CSCO has chosen to sever the ties with longtime partners like IBM (IBM), Hewlett-Packard (HPQ) and Dell (DELL) in order to compete in the server market.  This trio sells (or DID sell) billions in Cisco gear each year as they helped tech companies build out its IT infrastructure; IBM alone accounts for $3 billion (per analysts’ estimates). 

HP’s relationship with CSCO began to crumble when CEO Mark Hurd began aggressively pushing the ProCurve segment that makes LAN, WAN and wireless gear for powering networks.  However, the Big Blue relationship first went sour when CSCO stole Internet conferencing company Webex Communications right from IBM’s hands in 2007.