Neither company is saying a thing yet, but word is Cisco Systems (NASDAQ: CSCO) and EMC (NYSE: EMC) are joining up to sell a new collection of products designed to deliver cloud computing capabilities, Reuters reports. Called vBlock, the cloud solution is intended to help the companies compete more effectively with IBM (NYSE: IBM) and Hewlett-Packard (NYSE: HPQ).

The partnership, which no one is admitting to, involves a joint venture between Cisco and EMC that will sell vBlock. The former will supply the networking equipment and servers, with the latter kicking in the storage gear and virtualization technology through its VMWare (NYSE: VMW) subsidiary. The joint venture will put the systems together, integrate the components for clients, and make the whole pile of cables and silicon work. A formal announcement is expected next week.

VMware, the California-based server virtualization company, is due to come public the next few weeks as it wraps up its roadshow.

EMC Corporation (NYSE: EMC), which owns VMware, sold a big stake to Intel Corporation (NASDAQ: INTC) and will allow us to participate in this industry's growth as well. However, as pointed out by Eric Savitz in Barron's over the weekend, server virtualization might hurt the big server companies such as Sun Microsystems Inc (NASDAQ: SUNW) and Dell Inc (NASDAQ: DELL), as it reduces the need for servers on a five-to-ratio. Virtualization allows numerous users to work off of one server.

Technology bull markets often take off on a disruptive product and maybe server virtualization will be it. The IPO market for hardware and software has been dead for quite a while. Rather than going public, technology companies have been going private. The VMware deal is important because it could set the stage for renewed investor interest in technology. I'd keep an eye on this IPO, this could be a high flier.

Sun Microsystems, Inc. (NASDAQ:SUNW) had a mixed bag of news recently. According to research firms Gartner and IDC, its server sales were up sharply in the third quarter cementing it place as the No. 4 provider [subscription required] behind International Business Machines (NYSE:IBM), Dell, Inc. (NASDAQ:DELL) and Hewlett-Packard Co. (NYSE:HPQ).

However, in Sun's bid to be part of the Pentagon's new initiative to build out its supercomputer capacity, the company rolled snake eyes. The Defense Advanced Research Projects Agency awarded $500 million worth of contracts to IBM and Cray, Inc. (NASDAQ:CRAY). The plan is to build a supercomuter that is several times faster than the most advanced products available today.

Cray is a much smaller company than Sun. Its market capitalization is only $250 million. Cray's revenues last year were only $200 million.

For Sun, that has to hurt.

Douglas McIntyre is a partner at 24/7 Wall St.

Sun Microsystems, Inc. (NASDAQ:SUNW) has decided to make its software platform, Java, open source, not unlike the Linux OS that is marketed by Novell and Red Hat, Inc. (NASDAQ:RHAT). Microsoft Corp. (NASDAQ:MSFT) recently teamed with Novell, Inc. (NASDAQ:NOVL) to distribute Windows with the Suse version of Linux.

Sun's argument for making Java open source is that it will be more attractive to customers and programmers. But, being free does not always drive adoption. There is a reason that Microsoft still owns the operating system business worldwide while Linux is free. Without a development path lead by one company, the software can be hard to manage.

One thing for certain is that the market does not care. Sun's stock was up 1% on the news. The stock has been trading in a narrow range just above $5 for the last two months.