Cisco, EMC partnership turning into rivalry

NEW YORK: Cisco Systems Inc, the world’s biggest network equipment maker, and EMC Corp, the leading data storage company, are increasingly encroaching on each other’s turfs, in a sign their long partnership may be unraveling.
Cisco and EMC have for years collaborated on designing, marketing and cross-selling their products, choosing to go after corporate customers as allies instead of competitors. In 2009, they set up the VCE joint venture as a one-stop shop for data centers, bundling Cisco’s networking equipment and servers with EMC’s storage gear and software from EMC’s VMware Inc. subsidiary.
VCE has yet to turn a profit after three years, and relations between Cisco and EMC show signs of fraying, according to people familiar with the companies.
Cisco has had internal discussions in the past year about making its own move into the storage market by acquiring one of EMC’s competitors, according to one source. EMC has also considered partnering with or buying Cisco’s smaller networking rivals, other sources said.
And in July, when EMC’s VMWare announced plans to buy network technology start-up Nicira, Cisco was taken aback. Cisco had been eyeing Nicira as well and thought it had sealed a $750 million deal for the private company before VMware unexpectedly swooped in, people familiar with that deal said.
“There’s no growth to speak of in the technology market. The only way they can grow is to grab share by stepping on somebody else’s toes,” said Fred Hickey, editor of The High-Tech Strategist newsletter, which is widely read by investors.
When asked for comment, representatives for Cisco and EMC said they were committed to their partnership. They declined to confirm or deny if they had plans to acquire or partner with other technology companies.
“EMC and Cisco remain partners and will continue to shape the future of the data center through a broad relationship spanning many strategic areas,” said a Cisco spokesman.
“EMC is thoroughly committed to the strength and longevity of our Cisco partnership,” said an EMC spokesman.
Officials with VMware did not respond to a request for comment. EMC owns 80 percent of VMware, while Cisco has a small 5 percent stake.
As corporations cut back on IT spending in a weak global economy, experts said technology companies realized that they need to have comprehensive product offerings to drive growth.
Companies are increasingly looking to buy their technology in bundles in what is known as converged infrastructure, rather than purchasing items a la carte to assemble themselves. That has led to a wave of mergers and acquisitions, such as Hewlett-Packard Co’s