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Cisco, BMC Jump Together Into Cloud

Stocks in this article: CSCO BMC AMZN IBM HPQ MSFT

SAN JOSE, Calif. ( TheStreet) -- Cisco (CSCO), which is facing questions about its long-term growth potential, has joined forces with BMC (BMC) in an attempt to beef up its cloud strategy.

The venture offers service providers and enterprises a prepackaged bundle of Cisco hardware and BMC software. This includes Cisco's UCS servers, Nexus switches, firewalls and routers and BMC's management software.


"It's really for service providers to deliver services to enterprise customers," said Joe Wojtal, vice president of service provider solutions at Cisco. "This is going to support large-scale private cloud computing environments in the enterprise space as well."

Cloud services, which offer compute power and storage via the Internet, are one of the tech sector's hottest trends. Public clouds, such as Amazon's (AMZN) S3 managed storage service, are publicly available via the Internet. Private clouds, typically serving users within a specific company or organization, help businesses quickly share information and mange internal systems over vast distances.

Tech research firm IDC predicted a major payday for companies selling cloud-related hardware. Sales of servers supporting public clouds will grow from $582 million in 2009 to $718 million in 2014, it said, while server revenue for the larger private cloud market will grow from $2.6 billion to $5.7 billion.

Wojtal told TheStreet that agricultural giant Monsanto (MON) is already using the joint Cisco/BMC offering as part of a private cloud. Cisco and BMC have also racked up five service provider customers, he added, including Telefonica (TEF) and the Australian National Broadband Network.

Questions, however, have been asked about Cisco's long-term strategy in the aftermath of its recent first-quarter results and tepid guidance, with the cloud market cited as a particular challenge.

Hardware behemoths IBM (IBM) and HP (HPQ) have both been ramping up their cloud strategies as is Microsoft (MSFT) with its Azure cloud offering.

Undeterred, Wojtal told TheStreet that Cisco and BMC will use their alliance to take the complexity out of companies' cloud efforts. "We're really trying to speed deployment for the service providers and the enterprises," he said. "The integration work is quite complex."

Shares of Cisco, which was upgraded by Oppenheimer on Monday, rose 18 cents, or 0.94%, to $19.25 in pre-market trading.

--Written by James Rogers in New York.

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