Cisco Systems (CSCO) recently launched HyperFlex Systems, a “hyper-converged” data center appliance. The product combines data center management software and gear including servers, networking equipment, and storage into a single package.
Cisco launched this product to weather a tough macroenvironment in 2016. Technology firms including Cisco, FireEye (FEYE), and NetApp (NTAP) have reported slowdowns in revenue in some of their business segments. Research firm IDC also projects that firms will cut spending on information technology products and services in 2016.
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Cisco has also stated that few customers have decided to put off routine technology upgrades due to the prevailing uncertainty in the economy. As shown in the graph, Cisco’s revenues from its data center business segment fell by 3% YoY (year-over-year) in fiscal 2Q16 to $822 million. Cisco accounts for 2.4% of the Power Shares QQQ ETF (QQQ).
Previously, however, Cisco’s UCS (Unified Computing System) was driving its data center revenues at a rapid pace. UCS is a system that converges networking, storage, security, and applications into one infrastructure. This type of integrated infrastructure offers a cost-effective solution to Cisco’s customers.
Cisco sells its UCS products via a joint venture with EMC (EMC) and VMware (VMW) in a group popularly known as VCE (VMware, Cisco, EMC). The companies created the joint venture with a vision of establishing a converged infrastructure for data center consolidation, IT-as-a-service, and the cloud computing market.
Continue to the next part for more details on Cisco’s high hopes for HyperFlex Systems.