Cisco May Turn Against Hewlett-Packard

Updated from 2:25 p.m. EDT

Cisco Systems' (CSCO Quote) long-anticipated entry into the server market is imminent, potentially ramping up the competition between the networking giant and its long-term partner Hewlett-Packard (HPQ Quote).

Cisco CEO John Chambers and other members of the company's management team will be hosting a "Unified Computing" event at the firm's New York offices Monday, which is expected to signal a new Cisco strategy.

Traditionally, Cisco has focused its energies on networking technology such as switches and routers, although the firm is now seeking out new revenue streams. Partner H-P, on the other hand, has started to extend its own reach beyond PCs and servers into the networking arena with its ProCurve line.

"Cisco's move into servers can only succeed at the expense of H-P, Dell, IBM and [Sun Microsystems(JAVA Quote)]," wrote Charles King, an analyst at technology research firm Pund-IT. "Those same vendors work closely with Cisco in numerous markets and mutual customers, lending an automatic melodramatic aura to the announcement."

The first hints of Cisco's entry into the server market emerged last year, with rumors that the firm was planning to launch a blade server. Code-named "California Server," the device is rumored to use Intel (INTC Quote) processors and is said to be "closely coupled" with the networking giant's Nexus switch.

Blade servers, which are thinner versions of traditional servers, have grown in popularity in recent years, as users have tried to overcome data-center space constraints.