Cisco Eyes SAN Startups

Cisco Systems Inc. (Nasdaq: CSCO) may buy a SAN startup to augment its Fibre Channel switch business, according to industry sources.

"I've heard they're doing a little holiday shopping," quips one analyst, who asked not to be named. In a note on storage companies to investors today, another analyst, Thomas Curlin of RBC Capital Markets writes: "Cisco, with intentions of their own, has been seen as actively evaluating strategic opportunities in the marketplace to compliment their core switching business."

So what SAN startups interest Cisco? At least two analysts say one candidate is Incipient Inc., which makes virtualization software for intelligent switches. Incipient has a relationship with Brocade Communications Systems Inc. (Nasdaq: BRCD) and is said to be working with Storage Technology Corp. (StorageTek) (NYSE: STK) on a prototype appliance to compete with a storage router from EMC Corp. (NYSE: EMC). (See StorageTek Plans Virtualization Device and Incipient Looks to Deal.)

Incipient's virtualization software could enhance Cisco's MDS 9000 series switches, and the startup's been rumored for months to be looking at possible suitors.

A Cisco spokesperson says the company can't comment on any rumors about possible acquisitions. Robert Infantino, a spokesperson for Incipient, says the company is not in talks with any firm about being acquired.