Cisco Systems Inc said on Monday it will sell computer servers targeted at data centers, a move that pits it against partners such as IBM and Hewlett-Packard Co.

Owners of the new system can cut capital expenditures by 20 percent and operational expenses by 30 percent, according to Cisco.

Led by Chief Executive John Chambers, Cisco has been diversifying from its traditional router and storage business to a larger set of products, including video conferencing systems and software.

The company's expansion into the server market is seen as a direct challenge to IBM and HP, which, as its vendor partners, have helped to sell Cisco's network equipment to mutual customers.

Besides EMC and VMware, other Cisco partners for its new data center strategy include Intel Corp , Microsoft Corp , BMC Software Inc and Accenture Ltd

(Reporting by Ritsuko Ando; Editing by Derek Caney)

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