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Cisco, McData in Retail Faceoff

File this under unconfirmed, but fascinating, rumors: Cisco Systems Inc. (Nasdaq: CSCO) and McData Corp. (Nasdaq: MCDTA) are said to be caught in an unresolved competition for SAN business at Wal-Mart Stores Inc.

Apparently, McData has been supplying Wal-Mart with SAN switches for a while and won a bid for additional gear several months back, but Cisco CEO John Chambers got the store's technology buyers to consider its MDS 9000 as well, leading to a cycle of testing and bidding that still hasn't ended.

The story is interesting on several counts. First, Wal-Mart, which declined to comment for this article, has been notoriously cagey about its SAN setup, even though industry sources say it has one of the world's biggest commercial SAN deployments, allegedly including gear from McData, EMC Corp. (NYSE: EMC), and IBM Corp. (NYSE: IBM). So anything about it draws industry interest.

The story also illlustrates what sources say is Cisco's upselling approach. Cisco isn't shy about pushing longtime big customers of its networking equipment to consider its relatively new SAN switches -- even if they've already got someone else's.

Cisco, a longtime supplier to Wal-Mart, reportedly wouldn't settle for "no" when sales folk learned that McData had passed the initial bid for additional SAN equipment several months back. "John Chambers called the Wal-Mart CEO and extended the sales cycle another two months," says one financial analyst, who asked not to be named. "He begged for another shot."

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