Butter up your competitive knife

Break out your competitive knife set, start the grinder, it’s going to get interesting. Here is what Cisco is up to:

Cisco’s diversification into the server market is fraught with risk. Cisco boasts gross profit margins of close to 65 percent, while companies selling basic servers tend toward gross margins closer to 25 percent on those products.

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However, Cisco may have little choice other than to invade its rivals’ turf. Its core business is slowing, and for the company to meet Wall Street’s demands for growth, it must look to new lines of business.

Cisco needs to grow because investors demand rise in growth. Growth is not enough, it also has to come at a hefty profit margin in order to pay great CSCO dividends.

This is the ugly side of competition. When everything is on the up and up folks refer to one another and try to bring all the solution from a bunch of people. But when things turn a little south it’s all rats to themselves running for the high ground.

In this case, HP has it’s own switching gear. Ditto for routing. So, in order to get deeper into the data center and deliver the data center in a box, Cisco wants to bring in a server and the entire DC in a box. HP too. So they will butter up their plastic knifes, posture for a little while, and then bam….

Whenever companies in established partnerships go at it they not just screw themselves but their customers as well.