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Don't Bet Against Cisco

Cisco's (CSCO) days as the server industry's collaborator-in-chief may be over, much to the annoyance of Hewlett-Packard (HPQ), but the networking giant has good reasons for going its own way.

After months of rumor and speculation, Cisco entered the server market earlier this year, a move that placed it in direct competition with long-term partners H-P and IBM (IBM).

The tremors from the launch of Cisco's UCS technology are still being felt, and have prompted a frenzy of activity from the likes of H-P. This week, for example, the server giant teamed up with Alcatel-Lucent (ALU) to target the telecom sector, effectively attacking Cisco in its own back yard.

Like a jilted lover, H-P has been telling anyone willing to listen about Cisco's alleged shortcomings, and was quick to launch its UCS rival, the BladeSystem Matrix.

H-P, of course, also has its own ProCurve networking technology to push, and a picture is emerging of Cisco fending off multiple challengers. There has even been speculation that IBM may join forces with networking specialist Juniper (JNPR) to attack Cisco.

Two other Cisco rivals, 3Com (COMS) and Voltaire (VOLT) are also attempting to squeeze the networking giant while it targets the server market.

Despite turning old friends into new enemies, however, Cisco remains a networking behemoth, with the sort of muscle that most tech firms could only dream of. The San Jose, Calif.-based firm exited its recent third quarter with cash, cash equivalents and investments totaling $33.6 billion, and has been working hard to control its costs.

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