Blame It on Cisco
Nielsen said there are "a confluence of different factors" that are hitting enterprise networks, which over the past several years have not kept up with the pace of innovation in the data center. HP and other networking vendors, such as Juniper Networks, Aruba Networks and Extreme Networks, place the blame for that on Cisco, and say they are legitimate alternatives to the market leader. "HP's made networking interesting again," Mike Banic, vice president of global marketing with HP Networking and a former Juniper executive, said in an interview with eWEEK during the summer. "The market had been pretty stagnant in innovation and competition for about a decade now."However, HP executives have argued that the networking business is crucial to its efforts to become more of a data center solutions vendor, as it competes with the likes of IBM, Cisco and Dell. The new offerings suggest HP officials plan to continue investing in the networking hardware business. Officials with HP and other networking vendors argued that Cisco is too expensive and too proprietary, and that they offer comparable or better products that are less expensive. The emergence of HP, Juniper and others as credible competitors to Cisco has fueled increasing pricing pressures. Analysts say the competition between the vendors will increase. "We expect the battle for data center networks to intensify, as leading vendors aim their fabric strategies at creating simplified architectures," Matthew Ball, director of enterprise services at Canalys, said in a statement in June. "The battle for campus and branch-office environments, however, should not be ignored." Cisco in recent quarters has seen revenues in its core switching business decline, with analysts saying that the vendor became distracted in its efforts to grow into new markets and made its networking business vulnerable to rivals. Cisco executives have noted the issues and are reorganizing the company, including re-energizing the networking business with an aggressive rollout of new products and services. In addition, they've struck back at criticisms from HP, Juniper and others, arguing that their rivals are pushing a "good enough" networking message that focuses primarily on upfront equipment costs. In contrast, Cisco officials say their message is that the true way to measure the cost of networking is through total cost of ownership. In a Webcast scheduled for Oct. 10, officials with Cisco and Xerox, a Cisco customer, will argue what they say are the real costs of building and managing networks based on Cisco and HP technologies. The Webcast can be accessed through Cisco's Website.
HP has seen success in its networking push. In the company's fiscal year 2011 third quarter, HP's networking revenues jumped 15 percent. That has come amidst a rocky period for HP in other businesses, including the possible spinoff of its PC business, a move that led one analyst to suggest that HP may consider doing the same with its commodity networking hardware unit.