Cisco Takes Aim at H-P With New Servers

(Updates Cisco's share price)

SAN JOSE, Calif. ( TheStreet) -- Cisco ( CSCO) has unveiled new versions of its controversial UCS device, which it claims will extend its server strategy further into corporate data centers.

"Our portfolio is expanding; customers will have more selection with us," said Paul Durzan, director of product management for Cisco's Unified Computing business. "It's expanding the amount of form factors we have to provide our customers with more choice."

Initially available as a blade that fits into an eight-blade chassis, Cisco has launched three versions of the device that can fit into conventional data center racks.

"There's some people that believe that rack-mounts are the way to go," said Durzan. "People will generally choose racks because they don't need as many blades as a blade chassis holds."

The networking giant also took the wraps off an "extended memory" version of its blade, which is aimed at companies looking to consolidate servers onto a UCS device.

Cisco's foray into the server market has already changed the tech sector dynamic, heralding new partnerships and rivalries.

Cisco sent shockwaves through the sector earlier this year with its UCS launch, a controversial move that seriously annoyed long-standing partner Hewlett-Packard ( HPQ).

Not to be outdone, H-P fired a retaliatory shot at Cisco, unveiling its own BladeSystem Matrix, which it is touting as a "datacenter in a box," The server giant then upped the ante by forging a 10-year partnership with telecom equipment maker Alcatel-Lucent ( ALU) and has not missed an opportunity to trash talk its new rival.

Undeterred, Cisco is still eyeing H-P's turf. "As we said on our UCS launch, this is a natural extension for Cisco," explained Durzan. "Data centers are virtualizing, and as you virtualize, you need a more agile environment -- compute and network resources have to sit more closely together."

Despite making a song and dance about its entry into the server market, however, Cisco has not yet said how many UCS devices have been sold.

"At this point, we're not releasing numbers but the reception and the interest in the technology have been amazing." Durzan told TheStreet. "We're doing very well, in my mind."

The networking giant, which took a profit hit in its recent fourth-quarter results is looking to open up new revenue streams through its UCS. With the networking market already saturated with its products, Cisco has taken a calculated risk by challenging H-P.

During the company's recent fourth-quarter conference call Cisco CEO John Chambers predicted "volume" deployments of the technology in Fortune 50 companies during the second half of this year.

Cisco shares rose 31 cents, or 1.3%, to close at $23.98 Thursday, as the Nasdaq gained 0.3%.

-- Reported by James Rogers in New York

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