By entering into the compute business, Cisco immediately alienated its long time OEM and reseller partners (such as HP, IBM, and SUN) that built long and strong relationships with the company. Effectively, systems vendors had to face a hard truth: they had to find alternative providers for products being sourced from Cisco. Why continue to OEM, or resell, products from a competitor's portfolio? The cash flow would only serve to support this new competitor.
In fact, Cisco's expansion has essentially created a new global market opportunity for those companies who can step in quickly and supply Ethernet and SAN switches to once strong allies of Cisco. Voltaire, for example, has had its Vantage 10Gb Ethernet switch added to IBM's network products portfolio for System x. Yes, this is the same Voltaire I referenced in a past blog and where I talked about the original Voltaire's bad hair cut. In this case, however, the current Voltaire's hairdo is clean-cut, and they are looking to expand their Ethernet switch business exponentially as they leverage what they clearly see as a window of opportunity created by Cisco.
Make no mistake, HP, IBM, and Sun are not sitting still; they must strategize and execute a plan to add more products to their network switch portfolios, enhance their storage offerings, and fine tune their competitive server products - especially in the face of what will be an ever growing threat from the loosely coupled relationship between VMware, Cisco and EMC (VCE) as they steadfastly position as "Cloud Infrastructure/Solutions" enablers. Conversely, these gyrations actually do create more opportunity and we will see more examples of companies known for specific products taking a risk and providing new offerings to capitalize on these new opportunities - or in other words, others will also strike while the iron's hot.
There is good news in all of this for the one who matters most: the customer. There will be greater choice and more aggressive pricing (i.e. lower costs) over time. All the key players -- Broadcom, Brocade, Emulex, Mellanox, QLogic, Voltaire, and even Cisco -- will still be in the infrastructure. Exactly where they sit in the infrastructure may evolve quickly, but when market opportunity presents itself evolution can be rapid.