Cisco advances on HP with blades spinning

Cisco's Unified Computing System is seeing rapid adoption in the United States and beyond

Last March, HP CEO Léo Apotheker dismissed Cisco as neither a threat nor even an annoyance in the battle for server market share. Responding to Cisco's claims that its UCS system was enjoying rapid sales growth, Apotheker said, "They must be selling on planet Zircon."

Whether or not the Zirconians are, in fact, buying Cisco servers isn't clear. What is evident, however, is that Cisco is seeing more and more Earth-based organizations investing in its UCS x86 blades. According to IDC's Worldwide Quarterly Server Tracker, Cisco now holds the third-largest share of the blade server market in terms of factory revenue -- not too bad a showing, considering its relatively late arrival to the party in 2009, compared to market leader HP, second-place IBM, and now fourth-place holder Dell.

Yes, HP is still the blade king, mind, claiming a full 50 percent of the market for the quarter, according to IDC. IBM came in a distant second with 20.2 percent of the pie. Cisco's slice represented 9.4 percent, while Dell finished with 8.4 percent of total factory revenue for blades.

Cisco to HP: Can you UCS now?
What's striking, however, are Cisco's gains in the blade market, relative to its competitors, since diving in back in 2009. Worldwide, Cisco locked in 10.5 percent of the market share, while HP dropped from 54.2 percent to 48.4 percent; IBM dipped from 26.8 percent to 20 percent; and Dell remained flat at 9.3 percent.

Cisco has seen even great growth in the United States, grabbing 19.7 percent of the blade market since Q2 of 2009. HP's portion dropped nearly 11 percent from 56.7 percent to 45.8. IBM saw a drop of 8.6 percent, from 27.1 to 18.5 percent. Dell saw a small bump, up from 10.8 percent to 12.2 percent.

The question, then, is what has drawn Cisco's current list of 5,400 blade server customers (up from 900 in Q3 of 2010) to sign on with a company that's better known for networking. Blades sales are smoking hot right now, with revenue growing at twice the rate of the total markets, according to IDC Enterprise Servers Research Manager Jed Scaramella: "Blades represent a higher-value sale for server vendors, being increasingly deployed in converged systems to support virtual environments. The larger memory footprints and I/O interconnects needed have resulted in a continual increase in average selling prices for blade systems."

Evidently, Cisco's revolutionary recipe for a converged blade system (which dazzled the InfoWorld Test Center from the get-go) is meeting pent-up data center demands, thanks to its high degree of scalability, strong management features, virtualization- and cloud-friendliness, and built-in storage and networking features.

HP finishes atop the server heap
Still, there's no overlooking that fact that HP remains the company to beat in the server world, as it finished the first quarter of 2011 with the biggest piece of the server market as a whole: 31.5 percent. That figure is down 0.3 percent year over year, though HP's overall revenue from server sales is up 10.8 percent in the same time frame.

IBM, which ended 2010 as the market leader in server revenue, closed Q1 with a 29.2 percent share of the overall server market pie. Big Blue saw its overall worldwide market share swell by 2.3 percent year over year, with revenue growth representing a robust 22.1 percent. Continually strong sales of System z servers have helped IBM maintain its strong positioning.

Dell holds 15.6 percent of the worldwide server market share, down from 16 percent year over year. The company's revenue jumped 9.7 percent compared to Q1 of 2010.

Oracle ended the quarter with a 6.5 percent worldwide server market share, up just 0.1 percent. With that jump came a revenue surge of 13.6 percent.

Fujitsu, finally, is hanging on to 4.8 percent share of the server market, having seen a 1.6 percent overall drop in market share, as well as revenue drop of 15.6 percent.

Cisco, meanwhile, did not make IDC's list of overall server market factory revenue.

This article, "Cisco advances on HP with blades spinning," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest business technology news, follow on Twitter.

Copyright © 2011 IDG Communications, Inc.