June 09, 2010 12:06 AM ET
In our last newsletter we pointed out that Cisco has been the dominant vendor of enterprise switches and routers for the last 20 years and that that situation is not likely to change anytime soon. We also pointed out that there is some indication that Cisco is vulnerable to losing some market share. We will use this newsletter to discuss how we see HP positioned in the enterprise networking market and whether or not we think that HP will take significant market share away from Cisco.
HP has a long and sometimes strange history relative to networking. It has been in the networking business for decades. However, the importance of the networking business inside of HP has varied widely over that time. HP currently gives the appearance that they are serious about networking. While we thought that HP was going to acquire Force10, their recent acquisition of 3Com is an example of that seriousness. There was a time, however, not that long ago when HP's networking business reported into the HP printer business. At that point in time the HP networking business was not getting the resources and attention it needed inside of HP to become a major player in the networking market.
At the recent Interop conference in Las Vegas Jim had HP on a panel entitled "Why Networking Must Fundamentally Change". On the panel HP stated that one of the factors driving change in the network is that there is currently a lack of equitable competition and that lack of competition keeps prices unnecessarily high. We know of many Cisco shops that will negotiate with multiple networking vendors in part to get better pricing from Cisco. However, we don't know of many Cisco shops that will buy networking equipment from another vendor just to change the dynamics in the overall networking marketplace. So if HP is truly looking at this factor to drive change, we believe that it will be disappointed.
Another reason that HP gave for why networking must change was the massive growth in the number of end points and the growing pervasiveness of mobility. It is hard to argue that those factors are driving change. In fact, most of the other members of that panel also suggested that massive growth and mobility are driving change. HP stated that what IT organizations need to do to respond to these challenges is to carefully provision modern architectures. For reasons that we will discuss in future newsletters, we agree with that recommendation completely. However, Cisco has a long history of producing architecture documents to help IT organizations think about how they should plan their infrastructure. We doubt if Cisco will change that approach.
To date, HP does not have much of a history in producing architecture documents, particularly ones that cut across the HP business units. Unless HP really starts to help its customers and potential customers think a bit more strategically about the evolution of complex technologies it will not take much, if any, market share away from Cisco.