Some vendors can use their sheer size to make a daring foray succeed. Microsoft does this regularly, said analyst Roger Kay of Endpoint Technology Associates. The quintessentially dull software company tried to break into gaming hardware in 2001 with the XBox, and it struggled for years against established players Sony and Nintendo. Today the XBox 360 has a wide lead over its most direct competitor, Sony's PS3, but only after years of investment and losses. Kay doubts Microsoft has broken even yet on its cumulative investment in the platform.

"It's something Microsoft can do better than others, because they have the money and smarts," Kay said.

Success in a new business does require knowing what you're getting into. This is why Dell stumbled badly after it entered the printer business a few years ago, according to Kay. At the height of its success selling business and consumer PCs online, the company decided it could give Hewlett-Packard a run for its money in another mass-produced piece of hardware. What it didn't count on was HP's printing brand and intellectual property, as well as its marketing and distribution system, Kay said.

"They took a superficial similarity and assumed it was the same type of market, and it really wasn't," Kay said.

The biggest challenge generally isn't a new technology itself but the vendors that are selling it -- something Cisco would find no shortage of in the server industry.