Dell Wants to Be Cisco

The data center is confusing these days.

First, software vendor Oracle (Nasdaq: ORCL) decided to buy servers-and-software seller Sun Microsystems (Nasdaq: JAVA). Then, networking giant Cisco (Nasdaq: CSCO) announced a server platform of its own. And now server supplier Dell (Nasdaq: DELL) is reaching right back -- the company will sell Dell-branded networking gear for the enterprise data center.

The rebadged hardware comes from Brocade Communications Systems (Nasdaq: BRCD), and is designed to boost the performance of large clusters of virtual machines.

I've been out of corporate data centers since quitting my computer-support day job to become a full-time Fool three years ago. For a while, I could have gone back with hardly a hiccup -- but enterprise computing is changing so fast right now that the next computing hub I see might feel as alien as a breakfast on Saturn.

Virtual computing has taken off like a rocket, led by pioneer VMware (NYSE: VMW) and me-too wannabe Microsoft (Nasdaq: MSFT). In turn, that lift-off fuels the cloud computing revolution. A traditional server rack could house maybe a dozen production-class servers on a good day. With today's virtual machines and blade servers, the same rack could be home to hundreds of servers.

Both Cisco and Dell are attacking the new complexities of this ultra-dense environment, each starting from their own areas of expertise and co-opting the other's market. And it makes no sense to me. I'd rather see a tight-knit partnership between each industry's leaders, such as Dell and Cisco co-selling each other's solutions or even putting both names on a co-branded line of end-to-end equipment.

Even better, Cisco could take Sun's server division off Oracle's hands. That would give Cisco the larger data-center footprint it clearly craves while preserving whatever value may be left in Sun's once-dominant brand name. I'd be surprised to see this happen, of course -- but that deal would actually make sense. The only real winner in today's cross-sector deal would be Brocade, because it's always nice for a small hardware provider to win another distribution channel.