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Cisco Systems Wednesday denied that it has a price-matching initiative aimed at Hewlett-Packard's ProCurve Networking division, even as solution providers say the vendor is preparing to launch one.
According to a Cisco and HP VAR, who asked not be identified for fear of retribution, Cisco is readying a partner program dubbed "Ahead Of The Curve," which urges VARs to match HP ProCurve's pricing at any costs.
"Cisco made it very clear in verbal communications that HP is the enemy and they're not going to lose business to them," the VAR said. "They said they're not going to lose to ProCurve on price."
A Cisco spokesman said the vendor does not have a price-matching initiative at this point and that the company continues to rely on its established model of high-performance, reliable gear and recent programs like Core Accelerator and Navigate To Accelerate, which are aimed at boosting partner profitability in an economic downturn, to compete effectively.
The price war being waged through the channel is just the latest round in a renewed and heated competition between Cisco and HP as the two companies butt heads in more markets. Recently ProCurve has been eating into Cisco's networking legacy, and Cisco is starting to play the server game where HP dominated. At its Partner Summit last month, Cisco came out swinging, saying it doesn't plan to lose to HP and that it will fight tooth and nail to win.
"We are competing with HP. Period. End. It is competition," Wendy Bahr, Cisco's senior vice president of U.S. and Canada channels, said at the Partner Summit, later adding that "We refuse to lose."
The VAR said the channel is picking up on the competition and that the price war being waged is just one piece of the puzzle.
"There's a clash under way," the VAR said. "And the bigger picture is this is a very competitive situation. HP said it's going to go after Cisco and Cisco said it's not going to lose any deals to HP."
Along with Cisco making the competition with HP more vocal, the San Jose, Calif.-based networking powerhouse also recognized the impact HP ProCurve is having in the market by adding a limited lifetime warranty on select Cisco Catalyst switch models. HP ProCurve has made its lifetime warranty a strong selling point and Cisco, which has long been opposed to lifetime warranties, was seen to be caving to pressure, extending the warranties on the Catalyst 3000-E and 4500 switches from 90 days to a limited lifetime warranty.
"We talked to partners and we said, 'What can we do to help you be more competitive in the area of switching?' Because we heard from partners that that business is becoming more competitive," Keith Goodwin, Cisco's worldwide channel chief, said about the limited lifetime warranty at the Cisco Partner Summit.
And while Cisco is reportedly telling VARs to lower Cisco prices to match HP ProCurve's typically lower cost, solution providers worry that if the price war carries on, it's their margins that could ultimately suffer.
"Whenever you bring price into the equation, everyone gets squeezed," one VAR said. "I can tell you one thing; our margins will not go up."
