Actually it should be Cisco that are worried!
They are moving themselves into a space that is already heavily competitive and HP have spent the past few years wiping the floor with the other 2 incumbents (Dell and IBM).
Also as HP and IBM have proven, just because something is commodity doesnt mean there cant be innovation. It takes alot of knowledge, time and money to make excellent x86 servers (especially around power/cooling and management) and Cisco are starting from scratch, even Dell have learnt that commodity isnt about price.
All Cisco have done is open up their shops to some aggressive poaching by other vendors (if they let Cisco go after their server incumbents, then surely its only fair to extend the offer the other way ............ as many are!).
Cisco are a high margin (read 70% margins even after discount), vendor lock in company who have spents years milking customers as they have had little serious competition. All they have done is make themselves a target and given themselves no armour to defend themselves with. (starting to compete against companies that are used to 10-20% margins when you used to live on 70% isnt a sound business strategy). Love him or loathe him, Hurd made HP into a streamlined, efficient operator (at least compared to other vendors).
Converged IT isnt about taking three companies products and selling them under 1 banner, it is about taking 3 technology streams, merging them and making the solution greater than the sum of its parts. I fail to see how you can do that if you dont merge the R&D departments. Arcadia is nothing more than an SI (and we have plenty of them already).