Cisco, HP Clash over Networking Equipment Pricing (
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The friction between Hewlett-Packard and Cisco Systems is continuing, this
time in the area of networking equipment.
Specifically, the issue is the pricing of the networking equipment. HP
officials are pointing to comments some Cisco officials made during the
company’s Partner Summit in June as an indication that Cisco is instituting a
program urging partners to meet HP ProCurve prices.
Cisco officials are arguing that while they were vehement in the “refuse to
lose” message they sent to attendees of the Partner Summit, they said that
Cisco wasn't ready to get into any kind of price war with HP’s ProCurve
networking business.
“We talked about the need to work more effectively with our partners to
ensure that we bring together all of the various elements that Cisco can bring
to the table to win deals and solve customer problems,” Wendy Bahr, senior vice
president of U.S. and Canada channels for Cisco, said
in a blog post that never mentions HP by name but talks about recent news
reports around the issue. “We told our partners that together we should ‘refuse
to lose,’ but let me be clear: This does not mean that we will change our
winning formula. We will be sensitive to price, but we will compete through
value.”
Cisco and HP always have had a relationship of both competition and
cooperation, but that has been heightened in recent months, most notably with
Cisco’s introduction in March of its UCS
(Unified Computing System), which marked Cisco’s foray into the data center
hardware business. Cisco’s move reportedly strained relations with such vendors
as HP and IBM, which combined spend billions
of dollars a year on Cisco networking equipment.
Soon after, HP released its own all-in-one data center offering, called the BladeSystem
Matrix, which like UCS combines server, storage, networking and management
software in a single package. HP in June also took another swing at Cisco with
its partnership with telecommunications equipment maker Alcatel-Lucent,
a move that analysts said gives HP more ammunition in the areas of data centers
and cloud computing.
In her blog, Bahr said Cisco’s continued focus in dealing with partners and
end users will be on value rather than price.
HP had a different take on the message. Karl Soderlund, vice president and
general manager of sales and marketing for the Americas for HP ProCurve, said
in an interview that Cisco is putting in place a program for partners to match
HP ProCurve prices, and that it’s an indication that HP ProCurve is making a
dent in Cisco’s market share.
“This is very much a positive,” Soderlund said, adding that he expects it
will encourage Cisco customers to take a look at HP ProCurve products. “We wish
all Cisco customers out there know about it.”
Soderlund’s take was backed up by some reports in which Cisco resellers say
a price-match program by Cisco is in the works. However, other partners said
they haven’t heard about such an initiative.
Either way, Dave Passmore, an analyst with the Burton Group, said he can
understand why Cisco might be turning more of its attention to HP ProCurve,
given that its rival is now No. 2 behind Cisco in the network market and is
gaining ground.
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