Has Cisco Lost Its Edge?

With signs that Hewlett-Packard's ProCurve networking division is ratcheting up its fight against rival Cisco Systems, some Cisco solution providers are asking if the networking giant has taken its eye off the ball, in this case, the network edge.

Cisco has made much of its push beyond network routing and switching into areas such as security, VoIP, video, wireless and virtualization and its efforts to integrate those technologies into its flagship infrastructure products. It's a strategy that many Cisco partners credit for part of their success, providing an end-to-end technology strategy that is difficult for other vendors to compete against.

But as Cisco moves its focus deeper and deeper into new technology areas, some channel partners say the San Jose, Calif.-based vendor is taking its eye off the edge, leaving room for ProCurve to infiltrate the network with its lower-cost edge switches.

That could be problematic for the Cisco channel, as it has the potential to drive down partners' margins as they go up against ProCurve's lower-priced wares. It also opens a door for ProCurve to infiltrate other parts of the network, solution providers said.

And, contrary to conventional wisdom, it's not just smaller customers giving HP the nod over Cisco. Cisco partners said they're seeing more enterprises take the ProCurve plunge as well, and they're looking to Cisco to put a stop to it.

"I'm seeing the commoditization of the edge. People are looking at HP. I'm hearing of people buying it, enterprise customers," said Mike Mogavero, executive vice president of sales and marketing at Woodland Hills, Calif.-based solution provider Data Systems Worldwide, in an interview at the Cisco Partner Summit earlier this year. Mogavero said he only started seeing ProCurve show up competitively since last fall. "I think [Cisco] needs to do something to counter HP's message. They need to find a silver bullet to stop the momentum, to stop HP."

Steve Larson, director of sales at Plymouth, Minn.-based Cisco partner Enventis, a subsidiary of HickoryTech Corp., also said ProCurve is making inroads with bigger companies, particularly over the last year.

"I've seen it more in larger companies, Fortune 500 companies," Larson said. One of HP ProCurve's highest-profile customers, Minneapolis-based food company General Mills, happens to be headquartered in Enventis' back yard.

Lane Irvine, manager of network services at Long View Systems, Calgary, Alberta, said he's not running up against ProCurve in enterprise accounts but that the rival appears more frequently on the SMB competitive landscape in times such as these, when the economy takes a dip. "When things are slow and budgets are tightened, that's when people look at it," Irvine said.

According to recent numbers, HP ProCurve must be doing something right. The company grew worldwide port shipments by 28.4 percent in the first quarter compared to the same quarter a year ago, while the rest of the networking industry grew by 7.82 percent, according to research firm Dell'Oro Group, Redwood City, Calif., which ranks ProCurve as the world's second-largest enterprise LAN networking vendor, behind Cisco. In North America, ProCurve grew port shipments by 10.4 percent, while the rest of the market declined by 11.8 percent, Dell'Oro reported.

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