Analysts weigh in on HP-Cisco breakup

Posted on February 26, 2010

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By Kevin Komiega

-- The IT industry is a week removed from the not-so-sudden end to Hewlett-Packard's strategic relationship with Cisco, and now consultants are weighing in with a look at how it could affect customers and the IT world.

Cisco and HP officially announced that they would part ways when Cisco decided not to renew its System Integrator contract with HP (see "Cisco-HP partnership implodes"), sending shockwaves through the IT community.

However, according to David Vellante, co-founder of The Wikibon Project, customers can rest easy. He does not believe the rift between HP and Cisco will negatively affect customers – at least in the near term.

"Both of these firms are going to mask any disruption to customers. For example, if an HP services customer wants to do business with Cisco, HP will do it and vice versa," says Vellante. "I don't think Cisco or HP would ever undermine each other at the expense of a customer. They'll try to undermine each other, but not the customer."

Beyond the potential customer impact, Vellante says the HP-Cisco separation and HP's subsequent deal with QLogic (see "HP to resell QLogic's enterprise FC switches") has completely changed the Fibre Channel switching market.

"There was virtually no competition for Fibre Channel switches and all of a sudden QLogic is on the map. This changes the mix," says Vellante.

So what does head-to-head competition between HP and Cisco mean for the companies and the rest of the IT world?

"[HP and Cisco] are both giant companies that play in the same sandbox. While it might have been inevitable that eventually they would need to steal from each others' buckets to keep growing, both have fundamentally sound businesses so neither is in jeopardy from the other – not as they exist today," says Steve Duplessie, founder and senior analyst with the Enterprise Strategy Group.

Duplessie thinks HP is in a more desirable position than Cisco. "It will be much harder for Cisco to become a mainstream computer/server vendor than it will for HP to become a mainstream networking vendor, in my opinion," he says. "HP has credibility up and down the enterprise – not just in the core of the data center – and is often a much larger supplier to customers.  HP has a sales force built for selling a ton of different things, while Cisco has work to do there."

The quest to be a one-stop shop for IT is nothing new, but Taneja Group founder and consulting analyst Arun Taneja calls the HP-Cisco split a "huge negative for the industry."

"Cisco has done a large disservice to the entire computing industry by essentially starting a war because they want world domination," says Taneja. "It is destructive for the industry because suppliers and IT users now have to pick sides. It took us 20 years to break out of vendor lock-in and now we're heading back towards it."

The good news, Taneja says, is that a return to proprietary systems is not guaranteed despite the best efforts of many IT vendors.

"Just because Cisco has [servers with the Unified Computing System (UCS)] does not mean the world will roll over and play dead. It's not easy to pierce these markets," Taneja says.

Related articles:
Cisco-HP partnership implodes
Cisco enters server fray with Unified Computing System
HP to resell QLogic's enterprise FC switches


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