(CSCO - Get Report)
may be expecting
from its entry into the server market, but investors will also be weighing the impact on the networking giant's many partners and
Potentially the biggest impact could be on Cisco's long-time partner
(HPQ - Get Report)
, which now faces a
to its server business.
The goal-posts are shifting in the tech sector, forcing Cisco to seek new business opportunities outside of its core networking niche. With almost $30 billion in cash and a vast installed base, Cisco has the muscle to force itself into a new market, prompting
to add the company to its
conviction buy list
H-P, which saw its overall storage and server revenue plunge 18% in its recent first-quarter results, is understandably nervous about protecting its blade business, which grew 4% year over year.
"Would you let a plumber build your house?" sniped an H-P spokesperson, in an email to
. "[H-P has] been there, done that, have the customers to prove it."
Despite being an obvious slap in the face, however, Cisco's strategy may not prove as much of a challenge to H-P as it first appears.
"Over the intermediate term, we do not expect to see any adverse impact to the hardware stocks from this launch," wrote David Bailey, an analyst at Goldman Sachs, in a note, explaining that Cisco's server ramp-up could be slow. "Moreover, Cisco's servers seem only compatible with its own switches, which will likely dampen the rate of adoption."