Page 1 of 2
Will Hewlett-Packard's proposed acquisition of 3Com put more pressure on channel partners of HP and Cisco to pick one vendor over the other? That's a worry for some top partners of both technology giants, while other partners have clearly chosen a side and are not shy about saying it.
For their part, HP and 3Com insisted Wednesday that the proposed merger was actually a victory against vendor lock-in.
"If it's part of your strategy to have a proprietary architecture, then, yes, it's locking people into one brand," said Marius Haas, an HP senior vice president and general manager of the ProCurve Networking unit. "But if you're standards-based as we and 3Com are, then it's not locking in anybody."
Haas and 3Com COO Ron Sege, hosting a Wednesday press conference to discuss Palo Alto, Calif.-based HP's proposed $2.7 billion deal to acquire 3Com, returned several times to the difference between their open-standards approach to networking and what Haas called Cisco's "proprietary stack of hardware."
But some partners of HP and San Jose, Calif.-based Cisco were less sanguine about the proposed deal, saying the pressure to show total loyalty to one vendor over the other is reaching a boiling point.
One large HP and Cisco solution provider partner, who did not want to be identified, said he sees partners being caught in the sales crossfire and hurt by a networking product price war. What's more, he said, partners are likely to face significant pressure in the sales trenches to line up behind one or the other vendor.
"You've got two big gorillas going at it, competing for the same business," he said. "As a midmarket VAR I'm just trying to avoid getting stepped on."
Cisco's 65 percent gross margins are likely to drop as HP moves to aggressively take networking share away from Cisco, said the source. That kind of price war means partners are likely to feel the squeeze.
"This is a very big deal with two of the biggest and most powerful players in the channel and the industry," he said. "In a battle it is better to play offense than defense. This move by HP is going to require Cisco to play more defense than they ever have before."
Another solution provider, Mark Gonzalez of Nth Generation, criticized Cisco for even entering the server and storage business in the first place with its Unified Computing System (UCS) offering. Gonzalez, president of the San Diego-based HP partner, suggested that UCS served to wake up some sleeping data center giants that Cisco may not enjoy battling.
"Cisco has decided that it wants to dance with the elephants and it's about ready to find out what it feels like to be sat on by an elephant," he said. "Cisco is about to find out what it feels like to have someone who will compete with them across the board and turn their 65 percent margin business into a commodity. I'm not sure that Cisco knows how to live in a 20-to-30 points world, whereas HP has been thriving in it for years."
Cisco itself did not comment directly on the proposed deal, but in a Wednesday blog post addressing "industry consolidation," a Cisco executive wrote that "acquisitions in our industry only validate the fact that networking is becoming the platform for all forms of communications and IT," and that Cisco remains "very confident" in its business strategy.
