Microsoft and Cisco Systems announced this week that they are working together to enable a Cisco networking appliance to handle basic Windows Server 2008 functions such as network management and printing.

Cisco will embed a virtualization component within its Wide-Area Application Services (WAAS) networking appliances that will allow users to run these Windows Server 2008 services locally rather than through a server in a central data center.

The appliances will be available by the second half of this year, according to Baruch Deutsch, director of product marketing at Cisco. Aimed at corporate branch offices with light server and networking needs, such as bank branches or retail stores, the hardware will offer features such as Domain Name Systems (DNS), Dynamic Host Configuration Protocol (DHCP), Active Directory and Print Services.

Centralized servers are easier to deploy and manage for companies without IT staff at each branch and can provide quicker, faster service. But they can also be more difficult to manage. The Cisco appliances are designed to provide the ease of centralized deployment and management -- even through Microsoft's System Center management tools -- while offering local performance, Deutsch said.

The announcement is the first fruit borne of last August's peace pact between Microsoft CEO Steve Ballmer and his counterpart at Cisco, John Chambers.

Longtime partners, Microsoft and Cisco are competing directly in the unified communications arena, widely considered a lucrative market of the future.

About one-fifth of all Windows Servers today are deployed in remote or branch offices, according to Bala Kasiviswanathan, director of branch and storage solutions at Microsoft.

Existing WAAS appliances start at US$5,000 each. Pricing for the appliances with Server features built-in was not disclosed.

A Windows Server 2008 license will be bundled into the appliances. Thus, companies whose employees already have Windows Server client access licenses (CALs) in order to access Active Directory and/or storage and printing resources will not need to buy additional CALs when using the Cisco gear, Kasiviswanathan said.

Companies with heavier Windows Server needs will likely still invest in a full on-premises server at each branch office, Kasiviswanathan said.