Cisco headquarters in San Jose, Calif.
Tech heavyweights Cisco Systems Inc. and EMC Corp. dampened speculation of a merger as they unveiled a partnership to take on rivals Hewlett-Packard Co. and International Business Machines Corp. The companies have spent three years developing technology and ironing out the details of a deep partnership through which they will bundle Cisco's networking equipment and server computers with EMC's storage and virtualization technology.
Their goal is to become a top provider of data centre products as the industry switches to cloud computing services, where data is stored on central servers that can be accessed over the Internet and corporate networks.
Cisco and EMC also announced a joint venture with Intel Corp. called Acadia that will offer to help build and run some data centre systems for companies.
As they announced that partnership Tuesday, top executives from both companies suggested that persistent speculation that Cisco plans to acquire EMC was unfounded.
EMC chief executive officer Joe Tucci said in an interview that the rumours may have been sparked as investors got wind of the close talks between the two companies that led to the partnership over the past few years.
Cisco CEO John Chambers said in the same interview: "Our tendencies are to partner together. I think we do that remarkably well."
When specifically asked whether he was interested in buying EMC, as investors have long speculated might be the case, Mr. Chambers said: "You buy big-to-small. You partner big-to-big."
Cisco and EMC will sell pre-configured infrastructure packages designed to make it faster for companies to build out their data centres under a new brand, dubbed Vblock.
They are designed for large corporations to buy hundreds of server computers at once. They use virtualization technology from EMC's VMware Inc. subsidiary, which enables companies to run multiple virtual machines on a single server computer.
Only a small number of corporations are interested in buying 300 or more servers at once, the minimum that the partnership will sell, said Gartner analyst Tom Bittman.
"This is a good offering. It's an important offering, but it's a limited market," he said.
The companies may eventually offer smaller blocks of servers, expanding their market opportunity, he added.
They will establish one sales, professional services and support team for their products.
Six systems integrators will initially help sell the Cisco-EMC products: Accenture PLC, Capgemini, Computer Sciences Corp., Lockheed Martin Corp., Tata Consulting Services and Wipro Ltd.
Besides HP and IBM, other competitors include Dell Inc. and Sun Microsystems Inc., which Oracle Corp. is buying for some $7-billion (U.S.).
Enterprise Strategy Group analyst Mark Bowker said some competitors have already started blogging and tweeting about the new competition in an attempt to play down its importance.
"That's a sign the impact on the market is significant," he added.