Cisco Targets $14B Data Center Play With New Nexus Switch

Cisco Systems is launching a new data center switch as part of a strategy to foster consolidation and virtualization of centralized server, storage and network resources.

The new Nexus 5000 Series data center switch, launched Tuesday at the Cisco Partner Summit in Honolulu, is part of a new product family that Cisco says will help partners nab their share of the $14 billion data center hardware and services opportunity expected to develop over the next five years.

The Nexus 5000 launch follows the debut of the vendor's first data center switch, the Nexus 7000, in January and is targeted at the access layer, where it can connect and aggregate existing LANs and SANs. It aims to provide line-rate 10-Gigabit Ethernet switching as well as input/output consolidation with support for Fibre Channel over Ethernet (FCoE), Data Center Ethernet and virtualization technologies.

The new switch line was developed as part of a collaborative effort between Cisco and Nuova Systems, which Cisco Tuesday said it plans to acquire. Cisco has already invested $70 million to acquire an 80-percent of the company and now plans to purchase the remaining 20 percent in a deal expected to close by July.

The first product in the new 5000 series is the 5020 Server Access Switch, a two-rack unit device that includes a 56-port Layer 2 switch with 40 ports of 10-Gigabit Ethernet/FCoE with Power over Ethernet as well as two expansion slots. It is based on the same Nexus operating system as the 7000 and is scheduled for availability in May starting at $36,000.

NEXT: New Data Center Channel Programs

"As the network becomes more relevant, partners become more relevant. We estimate we will double our [data center] hardware technology sales to $10 billion over the next number of years and services are growing at a faster rate than hardware," said Edison Peres, vice president of worldwide channels at Cisco, San Jose, Calif., during a press conference. Cisco foresees an additional $4 billion in partner services opportunities in the data center, creating a $14 billion data center opportunity for Cisco channel partners within the next five years, he said.

Peres noted that not all Cisco channel partners will be interested in pursuing data center solutions, but those with server, networking and storage skill sets are best positioned to take advantage of the opportunity.

Pat Bodin, founder and CEO of Firefly, an Atlanta-based solution provider, said Cisco's data center vision and the opportunity to add services around it is going to be a key differentiator for resellers going forward. "This is critical to the market," he said. "It's going to be a requirement for us." Bodin said centralization is fueling the need to unify operating systems onto one machine. "Having a service portfolio is expected in the data center," he said. "I think services are critical, and it's not something you can muddle around with. It will be the key differentiator." He said to offer services in the unified data center, resellers will have to have both the capability and the capacity. Obtaining both is going to be a challenge for many partners, he noted.

To train and incent its partners to chase the new market opportunity, Cisco at the conference also launched several new channel initiatives, including a new data center specialization and the addition of data center products to its popular Value Incentive Program (VIP), a back-end rebate initiative that rewards partners for sales growth and customer satisfaction.

Data center technologies will be added to the VIP program starting in August, providing five percent to 10 percent backend rebates to partners that meet the program's growth and customer satisfaction requirements over the following six months. VIP already includes products from Cisco's unified communications, security and wireless networking portfolios.

All training for the new Advanced Data Center Networking Infrastructure Specialization 2.0 is available now to partners for free via the Web, Peres said.

Andrew R. Hickey contributed to this article