Cisco Systems is set to take the server vendors with its claims that many communications functions would be better off moved into the network.

That vision, which was outlined at Cisco's annual Worldwide Analyst Conference, is likely to bring the networking giant into conflict with system vendors, according to some industry analysts who attended the conference. But Cisco CEO John Chambers said the move was part of a broad strategy to set Cisco apart from networking rivals, many coming from Asia, that are gearing up to compete on equipment price.

Cisco has decided to move further into data centre functionality over the next year, looking to take a role in distributing both storage and processing power across a network in a strategy called "service virtualization."

"It won't be as much dependent on a (particular) device with a service. ... You won't care whether those (services) are in the data center or in remote locations," Chambers said.

The company aims to help service providers and enterprises move functions such as security, spam filtering and server load balancing from servers to switches or routers, said Charlie Giancarlo, Cisco's chief technology officer. In some cases, those functions may be distributed across the network by making storage and processing power available as a pooled resource across a high-speed network, he said.

Giancarlo used the example of the firewall function, which began on a dedicated server and has gradually moved into the network, first on appliances and later on components of routers and switches. Other functions that Cisco sees moving into the network infrastructure or being distributed across the network include SSL (Secure Sockets Layer) encryption, intrusion detection systems, RFID (radio frequency identification) functions and disk management, he said. These types of functions take up valuable processing power on a server and can better scale up if they are running in the network infrastructure, he said.

Ultimately, Cisco envisages "intelligent processor switches" that could create massively parallel computing capacity by using resources located in many data centers, he said.

The growth of network capacity itself will make data-center power more important over the coming years as service providers and enterprises build a rich layer of applications on top of IP networks that can carry anything that uses packets, Giancarlo said.

Cisco has accelerated this data-center strategy since last year, according to analyst Frank Dzubeck, president of Communications Network Architects. The move is likely to force choices between keeping functions in servers and operating systems and moving them into Cisco's territory, Dzubeck said. Many of the functions Cisco would like to move into the network, for example, are already provided in IBM's WebSphere middleware, he said.

Another analyst at the conference was more blunt.

"This is the future of technology. We are going to a zero-sum game," said Steve Kamman of CIBC World Markets, in New York. Cisco will try to sell its virtualisation strategy on the promise that if customers invest in the network they won't need as much server capacity and can put off or reduce server purchases, Kamman said. "If Cisco's going to get an additional couple of billion dollars a year in revenue, that's going to come out of someone else's pocket," he said.