EMC And Cisco: Ready To Disrupt IT -- And Each Other?

EMC and Cisco Systems, partners in the development of converged infrastructure technology that integrates compute, storage, networking and virtualization resources into a single data center architecture, may be arming themselves for a potential break in their relationship.

That break, which their channel partners hope does not happen -- and indeed which the two vendorsthemselfsay is not happening -- is not inevitable.

But as the winds of technological change become a hurricane that tears apart the traditional ways in which data centers are built, EMC and Cisco are both ready to take the lead with disruptive technologies of their own.

In an IT world where startups can disrupt the status quo and force their legacy peers to make painful changes in response, these two giants have indeed become disruptive forces with leading-edge technology that in some cases threatens to disrupt even their own business models.

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EMC, for instance, could completely divorce its feature-rich storage intellectual property from hardware, making it possible to turn any industry-standard server into a powerful storage solution. VMware, which is majority-owned by EMC, can nowvirtualizeboth storage and networking on industry-standard servers in much the same fashion as it did servers.

Cisco, meanwhile, is wrestling with VMware over control of the software-defined networking business even as it keeps in its back pocket what was once, and which could quickly become again, a high-performance flash storage offering that could compete with EMC.

Throw into this mix Lenovo, which is in the process of closing its acquisition of IBM'sx86business -- a move that would give it a way to compete with Cisco with the help of EMC, with which it already has a storage relationship.

The end result is that both EMC and Cisco have the ability to fire up complete infrastructure solutions that compete with each other, said Jamie Shepard, regional vice president atLumenate, a Dallas-based solution provider and partner to both vendors.

EMC could one day light up an entire solution by combining either its own storage software or VMware's newVSANsoftware-defined storage offering with anyone's network and either its own servers or with servers from a third party such as Lenovo orSupermicro, Shepard said. EMC can even top it withScaleIO, its software for tying the flash memory of multiple servers into a scalable high-performance system that in many cases can substitute for a SAN.

Cisco, Shepard said, can now combine its server and networking technology with itsInvictaflash storage, itsSourcefiresecurity software, and itsCloupiatechnology for connecting all these resources to VMware orOpenStackclouds.

"They're putting that all together as one solution, a hyper-converged technology," he said.

In many ways, the old days of alliances where everyone was working toward a common goal are gone, said one solution provider that partners with both EMC and Cisco and who asked to remain anonymous.

"In the old days, VMware did virtualization, CiscoUCSdid compute, and EMC did storage," the solution provider said. "Now everyone is starting to merge into each other's spaces. This makes it complicated to go to market with the different goals. And it makes it difficult for the channel to go to an account. We now have to whiteboard the different product lines."

NEXT: Good Partnership, Shaky Foundation

Good Partnership, Shaky Foundation

EMC and Cisco, along with partners Intel and VMware, in 2009 started talking about partnering to develop converged infrastructures that would allow compute, storage and networking resources in the data center to be controlled via a single management solution.

That partnership resulted in their investment in a joint venture,VCE, which developsvBlocksolutions combining its parent companies' technology in tightly integrated systems.

Both Cisco and EMC also use expertise gleaned from VCE to develop their own separate reference architectures.

For EMC, that means VSPEX, which ties EMC storage to partners' compute and networking technology. EMC storage paired with Cisco's UCS servers and networking gear is by far the most common configuration for VSPEX, although EMC provides reference architectures using technology from Cisco rivals including Lenovo for servers and Brocade for networking.

In addition to its partnership with EMC for both VCE and VSPEX, Cisco works with EMC rivals to develop other reference architectures itself, most notably its FlexPod partnership with NetApp.

While the EMC and Cisco partnerships around VCE and VSPEX are strong, accounting for nearly one-third of the fast-growing but still-small converged infrastructure business, according to IDC, this business is not tight glue holding the two together.

For instance, according to some solution providers that work with VSPEX reference architectures, there is no real vendor-sponsored "VSPEX" certification of a data center solution. Indeed, a partner that puts together EMC storage, Cisco networking and UCS servers, and VMware virtualization in the right combinations could call it VSPEX. Although, to be fair, that is also true about the joint NetApp-Cisco FlexPod reference architecture.

Even more important is the introduction of a new wild card: Lenovo.

Will EMC Play The Lenovo Card?

When EMC in 2012 first signed a strategic agreement with Lenovo, it was quick to point out that Lenovo, with its focus on entry-level servers, would likely be limited to entry-level VSPEX business that would in no way compete with Cisco.

EMC said it is now gradually replacing the hardware on which its storage solutions are built with Lenovo servers. At the same time, it is providing server technology to help Lenovo develop new generations of servers that would be easier to integrate into a VSPEX reference architecture. Lenovo also is selling entry-level storage solutions based on EMC technology in China.

More importantly, Lenovo's pending acquisition of IBM's x86 server business will make it the industry's third-largest producer of blade servers and provide a solid base for partnering with EMC in enterprise VSPEX opportunities. Lenovo also could fairly easily acquire networking technology to help it quickly ramp up a converged infrastructure offering.

While Lenovo cannot talk about specific changes until the server acquisition is complete, the company expects its EMC partnership to help it compete against common competitors Hewlett-Packard and Dell, said David Lincoln, director of product management for the company.

Lincoln said Lenovo and EMC are collaborating on development of servers that can be integrated into future EMC systems. "But there's no engineering development to integrate tools or deployment with EMC products," he said. "That's something we'll do in the future."

Jeremy Burton, executive vice president and chief marketing officer at EMC, Hopkinton, Mass., told CRN to not read too much into the dynamics at play with EMC, Cisco and Lenovo.

"I wish I could make this more interesting," Burton said.

Cisco remains the preferred partner for VCE, which had a "fantastic" 2013 and is expected to do even better, Burton said. "Despite reports last year that the end is nigh, it's still in good shape," he said.

Lenovo offers EMC a great opportunity to help build its China market, Burton said. "China is a country where we don't do much business," he said.

EMC also has said it will be using Lenovo gear as part of its storage appliances, Burton said. "The percentage we go with Lenovo hardware depends on where the U.S. government allows us," he said.

Another solution provider that partners with Cisco and EMC and who also asked not to be named called Cisco UCS a primary differentiator for VCE, and said that a VCE without Cisco would be a real blow to the market.

"People would see this as a big deal," the solution provider said. "I would be surprised if it got to that point. But I wouldn't be completely stunned."

EMC could be pushed into becoming a server vendor, with or without Lenovo, by customer demand, said the first solution provider partner who was quoted earlier in this story.

"EMC will some day go after the server business for customers who want to deal with a single OEM, just like customers who choose a vendor like Hewlett-Packard, which offers a full product line," that solution provider said.

NEXT: Will Cisco Play The Storage Card?

Will Cisco Play The Storage Card?

Cisco's acquisition of all-flash storage vendor Whiptail, meanwhile, gives it potential leverage against EMC.

Cisco early this year quietly released its Whiptail technology under the new Cisco UCS Invicta moniker. The company is being very careful to call Invicta flash-based memory, or a flash-based application tier, rather than flash-based storage.

That distinction is important. Invicta as flash-based memory is positioned as a way to increase application performance inside the server, whereas Invicta as flash-based storage would be seen as competition to EMC, NetApp and other storage vendors.

Cisco's Invicta technology is part of a two-pronged effort to increase performance of Cisco UCS servers and of the converged infrastructure built around them, said Todd Brannon, director of product marketing for the San Jose, Calif.-based company's UCS line.

"Customers are looking at how to deploy flash storage," Brannon said. "But we'd be going in the wrong direction if we wanted to stand up flash as a separate system. We want to deploy it to accelerate applications."

As Invicta, the Whiptail technology was re-platformed as nodes for Cisco UCS solutions and now feature extended integration with the UCS Director, Brannon said.

"Prior to our acquisition, Whiptail was sold as stand-alone systems," he said. "Now it's an extension of the UCS footprint. Whiptail's existing customers are grandfathered if they have no UCS environment. But otherwise, it's a part of UCS."

The second solution provider partner who was quoted earlier said Cisco is indeed calling Invicta an "application platform."

"But at the end of the day, call it what you will, it's a storage platform," the solution provider said.

The solution provider has yet to see a case where Cisco sells Invicta to a customer who is not a UCS customer, but is seeing Cisco push Invicta hard in its UCS installed base.

"Cisco is going with it to every UCS customer," the solution provider said. "Cisco doesn't have storage experience, so the easiest way to sell it is to leverage their UCS contacts. They're selling through partners. But it's usually Cisco-led."

That sales activity will likely continue, with Cisco discounting its Invicta line to get the footprint, the solution provider said.

"I haven't heard EMC say to partners, 'Don't sell Invicta,' " the solution provider said. "But EMC is aware of what's happening. It's causing concern. EMC is definitely ramping up competitive information against Invicta."

How this plays out depends on how Cisco manages its Invicta offering, the solution provider said.

"If Cisco continues to push Invicta on a stand-alone basis, there will be problems between it and EMC," the solution provider said. "We can see the friction happening. We're seeing it at the account rep level. But if Cisco keeps it as an integrated part of UCS, maybe not."

The first solution provider quoted in this story said chances are low that Cisco will make Invicta a stand-alone product, if for no other reason than the line does not have all the features of a stand-alone flash storage array.

"Cisco's Whiptail technology will be more of an opportunistic sales situation," the solution provider said. "If a Cisco account team gets too aggressive against EMC, EMC can call Cisco to handle it from the top down."

There is always the possibility that Cisco might acquire a storage software company to expand Invicta, the solution provider said. "I could see them buying a company with dedupe and replication technology that could make Whiptail more like a tiered storage offering," the solution provider said.

Cisco is likely to take its time rolling out a serious storage offering, just as it did rolling out its UCS servers, said a third solution provider partner of Cisco and EMC who asked not to be named.

"When Cisco brought out UCS, it was a slow rollout," that solution provider said. "Cisco people were smart. They didn't pick a fight. They played the nice guy. They will probably do the same with storage. They know their partners sell EMC and NetApp. I'll guess they'll do the same with storage. You'll go along three years, and one day you'll wake up and say, 'Wow, where did that come from?' "

EMC never sees Whiptail in an account, and Whiptail, while independent, was never a top 10 flash storage vendor, said EMC’s Burton. "Whiptail is a small fish in a very big pond at Cisco," he said.

Burton said he hopes what people understand is that, while it's fun to draw black and white lines on paper in terms of who is competing with whom, the fact is vendors that are close partners often have areas of overlap that can be easily managed.

"You just need to engage," he said. "I see places where we meet Cisco, but it does not impact the larger overall partnership. We have a frank and open relationship with Cisco. We don't throw hate mail at each other. We work closely on issues. Cisco UCS has to have flash. So do we."

NEXT: Will EMC Play The VMware Card?

Will EMC Play The VMware Card?

For understanding the potential EMC has for disrupting both itself and the IT industry, look no further than its closest ally, VMware.

VMware a couple of years back became a leading proponent of software-defined networking, or SDN, with its acquisition of Nicira. VMware became a leading proponent not only because of the work Nicira had done in building SDN technology, but also because VMware, unlike Cisco and most legacy networking vendors, has no legacy hardware business to protect.

Cisco also is developing its own SDN technology as part of its Cisco ONE (Open Networking Environment) strategy. Unlike VMware, Cisco is treading carefully into SDN as it needs to be ready to compete in the market even as it protects its legacy hardware, according to industry observers.

Cisco and EMC are already squabbling over SDN, said the first solution provider quoted in this story.

"But it's getting worse since VMware released NSX [its network virtualization platform]," the solution provider said. "Cisco is saying NSX is not real. But this could pour gasoline on the fire between them."

VMware also is developing its Virtual SAN, or VSAN, software-defined storage technology for its vSphere private cloud and virtualization platform. VSAN runs on any standard x86 server, where it virtualizes and pools server storage capacity to produce resilient shared storage for virtual machines in VMware environments.

Alberto Farronato, VMware's director of product marketing for storage and availability, said VSAN optimizes server-based storage for use with virtualized environments.

Farronato agreed that VSAN overlaps with virtualized storage offerings of other storage vendors that partner with VMware, including HP and NetApp. "While on the surface they seem to be similar, they all have a different set of capabilities," he said. "So it's no surprise the world seems more co-opetitive."

VSAN has the potential to disrupt the entire storage business, including that of parent company EMC, wrote Aaron Rakers, an analyst with Stifel Nicolaus Equity Research, in a March 6 research report.

"As the competitive landscape in enterprise storage has become increasingly confusing, we believe VMware's VSAN launch will create another layer of questioning around how the overall storage market will evolve over the next three to five years," he wrote.

How Will This All Play Out?

Given the dynamics of the relationship between EMC and Cisco and the notion that they are ready to go their own way if needed, a break in their relationship, while a true headline-grabber, would not really hurt either.

What are the possible scenarios?

EMC and Cisco could quit developing and marketing reference architectures while remaining tied together in VCE, the joint venture in which both have an equity stake.

They also could end their VCE relationship in addition to their VSPEX programs. Cisco has a much smaller 35 percent stake in the company, Rakers told CRN.

According to the Feb. 20, 2014, Form 10-Q filed with the Securities and Exchange Commission, Cisco has invested $669 million in VCE and already has recognized a $533 million cumulative loss, giving it a carrying value, or what it would write off as a loss, of $136 million.

But, Cisco wrote in the 10-Q filing, "Over the next 12 months, as VCE scales its operations, the Company expects that it will make additional investments in VCE and may incur additional losses proportionate with the Company’s share ownership."

There are areas where EMC and Cisco overlap, but that does not mean they will split, said Kent MacDonald, vice president of converged infrastructure and network services at Long View Systems, a Calgary, Alberta-based partner to both vendors.

"We're seeing healthy collaboration, and reasonably healthy co-opetition," MacDonald said.