Ignore the hype. The networking giant's entry into the server market won't make much of a difference to enterprise IT. Cisco’s entry into the server market, hailed by some tech writers and analysts as a game changer that will cause execs at Hewlett-Packard and IBM to lose a lot of sleep, is in reality a “nothing burger.” It won’t make money for Cisco, it won’t be a great choice for IT, and it won’t change the game.Lost in the hype was a critical point. “Cisco already has a strong product in VFrame [fabric virtualization] that it can’t market. If Cisco can’t make a play there, why does it think it can make a play with [a server optimized for virtualization]?” asks analyst Rachel Chalmers, who covers virtualization for the 451 Group. “This hardly rocks my world,” she adds. An x86 server with little differentiation Although the networking giant didn’t spell out the details, it’s clear that the new product will be an x86-based server with a hypervisor and maybe more virtualization software on top of the operating system.As Chalmers points out, numerous server products already have a built-in hypervisor, including, RHEL, Suse Linux, and Microsoft Windows Server 2008. So how much value does Cisco’s hypervisor (which will probably actually be EMC VMware’s) really add?Sure, Cisco will add more networking-oriented features to its servers. But an x86 server is an x86 server. If it produces enough of them, Cisco may drive down the price of the boxes, which is certainly a short-term benefit for IT. Server margins are already thin, and prices and are still going down. In the third quarter, worldwide server shipments increased 4.4 percent over the same quarter last year, while revenue for the same period declined 5.4 percent, according to Gartner. We’ll see how sustainable those low prices will be, and we may also see some consolidation as a result.If anyone is really losing sleep over the announcement, it’s probably Sun CEO Jonathan Schwartz. In the last quarter, his company’s server revenues were down 13.7 percent, three times worse than the market as a whole. Given Sun’s overall weakness, any loss of business or margin is very worrisome. Why Cisco sees value in virtualized servers One point in Cisco’s favor is its close relationship with VMware, “so they might have better integration, awareness of product road maps, etc. that would enable them to create a better product,” says Bernard Golden, author of Virtualization for Dummies. However, “there’s so much development in the virtualization/cloud areas that it’s kind of a muddle,” he adds.“We see this not as a new market, but a market transition. Our vision is, ‘How do we virtualize the entire datacenter?’ It is not about a single product. We will have a series of products that enable us to make that transition,” said Padmasree Warrior, the company’s CTO, in an interview with the New York Times.”It’s not all that surprising that Cisco is looking to virtualization as its core business slows. In an informal poll of analysts and CIOs late last year, InfoWorld found that virtualization is among the five top spending priorities in tight times for IT shops. Although Cisco will be a rookie server player, it has longstanding relationships with enterprises via its networking business. The company obviously assumes that its enterprise credibility will get its server salespeople in the door, but it’s not at all clear that credibility in one line of business will automatically carry over into another.If Cisco is really serious about making virtualization a key part of its business, it’s not a stretch to imagine it buying VMware from EMC. Cisco has plenty of cash, and EMC may well be tired of carrying so much low-priced VMware on its books.Cisco CEO John Chambers is no dummy, but entering a low-margin business with a play likely to drive down margins even more doesn’t seem like a great move. Moreover, I don’t think that muscling into the turf of some of your most important allies — Dell, HP, and IBM — is a great idea. Big Blue has reportedly stopped carrying Cisco’s Fibre Intelligent Gigabit Ethernet switch, and I’ll bet that more products drop off the list. Cisco downplays the clash with its allies: “Any time there is a major transition occurring, there will be large companies that have to compete in some areas,” Warrior told the Times. In any case, there’s a lot less here than meets the eye, or as they say in Boston, no big whoop.I welcome your comments, tips and suggestions; reach me at bill.snyder@sbcglobal.net. Technology Industry