Cisco Systems is going to go in direct competition with their existing partners such as IBM and HP with the release of their new blade server line. Previously content to offer network connectivity solutions like routers and switches, Cisco is now going to provide multifunction computer servers designed to cut IT costs while reducing energy usage. The new servers will use Intel CPUs and they will run Microsoft's Hyper-V technology and/or VMWare's virtualization software.
Blade servers are designed to minimize space and energy usage and, when combined with virtualization software, will provide the technology that will allow these servers to perform multiple functions at once.
Needless to say, such a move will likely anger their former hardware partners who relied upon Cisco to interconnect their server products into a cohesive network solution. This new territory for Cisco is expected to bring lower profit margins than their traditional product offerings but presumably will offer customers a one-vendor solution to many of their IT needs. This move may encourage hardware vendors like IBM and HP to strengthen relations with some of Cisco's smaller competitors.