We have no confirmation from Cisco, it could just be rumour but it sure sounds like it could be true and it makes sense. After all, HP and Cisco have been trading blows for the last two years and progressively escalating the war. Once the Acadia / VCE project was announced, it was clear where Cisco is planning to go.

It’s my opinion that HP started the fight about three or four years ago when they restarted their Procurve networking products.

ProCurve – why did HP start ProCurve ?

HP set out to make low cost Ethernet switches that directly connected to a core Cisco network. They even convinced Cisco to license their CDP technology which reassured the network engineers that somehow Cisco approved of this new equipment.

More recently the ProCurve product grew to include chassis based switches that had some serious routing capability. At that point, it was clear that HP means to take on Cisco. Cisco regards those core ethernet switches as their own market and no one else should be in that space.

HP bought 3Com

While HP only had switches, Cisco resellers could always position their “portfolio”. That is, not only does Cisco have switches, but routers, security appliances, management software, WAN equipment and the whole show.

But after HP integrates 3Com, they have the whole portfolio too. In fact, not a very good one since 3Com equipment is not exactly recognised as quality. Most importantly, the people who design networks and layout strategy remember being completely shafted by 3Com in the early 2000′s and they haven’t forgotten.

So, now HP has a complete portfolio. It needs money and time to build this portfolio into a quality product offering (because the current product isn’t ready for the big time e.g. here). The HP ProCurve has a solid reputation for cheap and cheerful (and NOT enterprise grade).

So Cisco did some servers

As part of the FCoE push, Cisco released a bunch of Intel servers. Ultimately, the actual servers are a me-too product with some cute finishing touches. That is, if you glue Intel chips to a motherboard, you don’t get a lot of profit margin, Intel does. And this isn’t a strategy that Cisco has done before.

Several people/pundits have queried whether Cisco has been forced into servers. I maintain that Cisco had to respond to HP entering the network space. They have added some Cisco sauce by applying a network technology to their platform disguised as FCoE. This means they have a good marketing strategy, a differentiator for the customer.

it’s possible that this was the intent all along. Ditch HP before their network strategy is mature and enter the server space with a strong offering. They’ve got EMC for storage, and partnerships with all the majors such as Intel, VMware, Microsoft etc.

What Level?

The one partnership that matters between Cisco and HP is the “Gold Partner Status”. This entitles HP to preferential purchase price, deep technical support integration and many other benefits. If Cisco removes this partnership, then HP can no longer compete in the open market on price (unless they make a loss) or technical support.

But there are other partnership programs that have various names. Global partners, Corporate Partners, Strategy partners or whatever. They change quite often and they don’t have much impact at customer level. If Cisco is removing HP from one these programs, we won’t see much of a change.

Dell dumped too ?

Network World has reported that Cisco is planning to kill it’s partnership with Dell. Combine this with the HP termination and we might have a trend. John Chambers has been known to make big bets in the past, and this might be something they need to do.

Losing share in the telecomms area

Cisco has also been losing marketshare in the Telecomm / Service Provider space. This is where the really big money is, with millions spent on just a few projects. Juniper and Huawei are taking big chunks out of Cisco’s customer base. Does this leave Cisco with a revenue hole in a couple of years ?

“Forward Planning”

So, if it’s true, the Cisco is planning to move up the stack and sell Intel servers. Further, they mean to take HP head on in the existing customer base. It’s an aggressive move but a perfect time to do it.

First, HP ProCurve networking needs a couple of years to mature and stabilise. Second, HP Management is busy digesting their acquisition of EDS (which is having problems due to low profit margins in the EDS business) and may not be able to cope with a head on fight. Third, HP people are disorganised due to the number of re-organisations, cutbacks, and acquisitions.

As a customer, I’m delighted. I’m expecting to see price cuts and improved service. Cisco has been light on new features for the last couple of years and steadily increasing prices. HP has become fat and comfortable with it’s incumbent status.

Bring it on.

© Etherealmind for Gestalt IT, 2010. | What might it mean if Cisco Dumps HP As Certified Partner ?
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Those HP StorageWorks guys have a lot of sounds-good-but-sells-nothing crap in their locker. Remember RISS? That’s the role the ExDS9100 whatever fancy box is doing now. Then he’s got to somehow knock sense into the PolyServe takeover (PolyCurve? No, forget that one) and Ibrix. We really kicked everyone’s NAS butt with Celerra. But EVA, damn it, EVA 2 could be good.

We got a unified stack with Cisco and VMware, but Cisco and servers, I don’t know. How good is Chambers really, I mean really really? He’s spread himself awful thin over the thousand and one things Cisco is doing and, I know, Cisco is Cisco. But Chambers isn’t going to be there for ever, and Hurd is probably going to outlive him.

If the Cisco servers don’t really hack it (and, you know, they may not), it’s not like Dell, HP and IBM are wallflowers at the server dance. Then there’s that Acer guy that says we’re all dinosaurs. He’s nibbling at the foursome’s heels and we need a backstop. Okay, put that off to one side for a minute. Let’s think about growth.

We’re a $53.4 billion market capitalization company. Ok, $36.6 billion if you strip out VMware. How are we going to gow more? I says to my guys, “look, there’s no more real growth in the storage business. To do something big there we gotta buy HDS or NetApp and both would give us a world of hurt in integrating their products, especially NetApp’s, and there’s a real chance the sum of the parts could be less than the sum of the separate pieces. Let’s not even go there.”

The information infrastructure stuff is growing. Hollis keeps yacking at me (even more than normal) about this. It’s two or three times a week now! Doesn’t that guy ever sleep or eat or play golf? But I tell him, “that stuff is organic and that means slow and we need something quicker than twenty years from now.” I’ll be long gone then. I want something big on my crown. I don’t wanna slink off like Warmenhoven, always thinking I coulda been a contender.

This is getting kinda long, so I’ll just cut it off here. But I got an idea that’ll kill you. Seriously, it’ll blow you away. But first I gotta make some calls and set some stuff in motion. Maybe I’ll tell you about it on Monday or something.

© Don Joey for Gestalt IT, 2010. | What’s Keeping Me Up At Night
Read more posts categorized as All, Industry Confidential