Cisco Serving Up Open Source?

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Includes: CSCO, DELL, MSFT, NOVL, ORCL, RHT, SAP
by: Joe Panettieri

Most folks are focusing on Cisco Systems’ (NASDAQ:CSCO) consumer electronics push this week. But I'm keeping one eye on the data center -- where Cisco apparently is preparing to launch blade servers. If true, I wonder: How soon will Cisco speed dial Red Hat (NYSE:RHT), MySQL, Novell (NASDAQ:NOVL), SugarCRM and other open source application providers?

Sure, Cisco already has relationships with a range of software companies. But pushing into the fast-growing blade server market will force Cisco to strengthen partnerships with operating system vendors, application providers, middleware developers and so on.

The ties between top server makers and massive application providers are notoriously strong. Consider this: Dell (NASDAQ:DELL) is Oracle’s (NASDAQ:ORCL) biggest reseller (or so Dell claimed at an even I attended in 2006). Certainly, Cisco can develop similar relationships with the usual software suspects (Microsoft (NASDAQ:MSFT), Oracle, SAP, etc.).

Changing the Rules of the Server Game

But if Cisco truly wants to disrupt the server market — and capture the next generation of application systems — the networking giant should also ink relationships with Alfresco, JasperSoft, Openbravo, Pentaho, SugarCRM and other open source companies.

Somewhere within the blade server strategy, Cisco must figure out how to work even more closely with SaaS (software as a service) application providers and hosting firms that serve up Exchange Server, SharePoint and other popular SaaS applications. At the same time, Cisco can potentially create links between its servers and the company’s Wide Area Application Services strategy.

Parting Shot

The smartest, most disruptive move of all: Cisco should quietly test Asterisk (an open source phone system) on its servers, and prepare to potentially cannibalize Cisco’s own unified communications business.

Disclosure: no positions