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Dell Plans to Cross Blades With Cisco

Dell isn’t worrying too much about the impending arrival of Cisco Systems in the blade market, at least publicly. In a chalk talk held with journalists and analysts, the company said it has new blade servers coming and gave hints at what Cisco might have in store.

Rick Becker, vice president of software and solutions in the Dell Product Group, said that Dell (NASDAQ: DELL) plans to release a new line of blades built around virtualization when Intel (NASDAQ: INTC) ships its next iteration of Nehalem processors.

The chip giant is expected to release the Nehalem-EP line under the Xeon brand name this month. When those chips ship, Dell will announce its products, Becker said.

Cisco (NASDAQ: CSCO) is widely believed to be entering the blade server market with the announcement of "Project California," a blade server designed specifically for virtualization. An announcement is expected next week.

At a recent CIO summit, Dell surveyed attendees regarding virtualization, and found that while 70 percent of the CIOs at the event were deploying virtualization within their company, 60 percent said costs and systems management challenges are significant obstacles to a more extensive virtualization deployment.

"Virtualization doesn't have to be expensive and it doesn't have to be complex," Becker told the call. "There's a lot of confusion around I/O and virtualization I/O and how to manage bandwidth. Carving out bandwidth is key to the next level of success. Most customers are bottlenecked around I/O with virtualized servers."

Dell's challenge is how to consolidate the customer's network and drive out the complexity of managing thousands of servers and devices. To do so, it learned by using itself as a guinea pig. Becker's group virtualized 5,000 servers internally and saved the company $29 million. It also cut application deployment time from 45 days to four.

Then it began taking those lessons to customers. Tool maker Black and Decker consolidated servers in its home improvement division through virtualization and saved $800,000 over a three year period. It also reduced the number of physical servers by 70 percent.

Virtualization software is beginning to splinter along customer concerns. Customers go for VMware because they like the hypervisor, Virtual Center, and VMware's business model. Microsoft is gaining ground because of its integration with the operating system and with Microsoft apps. Becker said Xen server hasn't been particularly strong outside of the open source community.

Bring it on, Cisco

Asked about Cisco's expected venture into blades, Becker had to walk a fine line and not violate his non-disclosure agreement. That said, he acknowledged Cisco will be a competitor.

"I do believe the Nexus and Unified Computing is going to be really appealing to a segment of my customers," he told the call. "Some of my big enterprise customers are strong Cisco shops and they are going to be real excited at being able to manage their network and their servers and their storage from the network cloud."

But Cisco is only looking at blades, which he thinks is only a partial solution.

"Any one of my competitors who tried to deliver a blade-only solution, over time we've seen them move to the Dell model," said Becker. "Whether it's tower, rack or blade, you need to have the right solution to the right problem to compete effectively in the server space, no matter what my partners or competitors choose to do."