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And while HP seemingly braced for the fallout, the breakup actually goes further than just HP's relationship as a reseller of Cisco products.
One channel source close to the two companies said that Cisco has decided it will no longer use any HP products in its own offerings. In particular, Cisco had been using HP ProLiant servers as part of its VoIP solution, but has decided to use IBM servers instead. However, according to that source, the IBM servers have yet to work in Cisco's VoIP solution as expected.
Cisco's refusal to renew HP's Systems Integrator contract could also go deeper. The rift is sure to have some affect on HP's $20 billion plus services business. HP took hold of thousands of customer services/outsourcing agreements when it acquired systems integration giant EDS for $13.9 billion in 2008.
It also remains to be seen whether the rift could cause potential network or architectural incompatibilities as both vendors aggressively move to provide new private/public cloud architectures.
John Convery, executive vice president, vendor relations and marketing for Denali Advanced Integration, a top partner for both HP and Cisco, said he sees it as critical that the companies continue to have ongoing service partnership given existing commitments with a huge installed base of customers using both Cisco and HP equipment. "You can't just operate in a vacuum," he said.
Convery said he is not surprised by Cisco's move to sever ties given HP's acquisition of 3Com and a face off that pits both vendors' partner conferences against one another in the last week of April.
"There are no surprises here," said Convery. "The big boys don't want to play in the same school yard sandbox anymore. This is competition at its best."
Convery said he sees little impact on the day-to-day business of Denali which is committed to partnering with both vendors.
"It creates an environment where the partner needs to be well engaged helping customers sort through the solutions," he said. "HP is coming at this with converged infrastructure and server kind of centric focus. Then you have Cisco taking it from the networking side. Customers are going to need the expertise companies like Denali have with hundreds of certified engineers trained in both Cisco and HP. We have to help customers through their pain points and listen to them."
For Cisco partners, the shattered pairing opens the door to questions over future interoperability, as Cisco's and HPs' technologies would play well together on the network and server side, respectively. It also raises questions around service for the legacy equipment that remains in place and how that will be serviced.
Still, a greater worry for Cisco partners is whether giving HP the boot will create more direct competition between Cisco and its channel.
"The only concern that we have is how much will Cisco start competing against its channel in the future," said Dan Holt, CEO of HEIT, a Fort Collins, Colo.-based Cisco managed services partner. Holt said if Cisco becomes "more like HP," it could lead to Cisco and some of its solution providers competing against each other for services deals.
Holt said the biggest impact of the split will be felt in massive partners like AT&T.
Meanwhile, for Headlands Associates director Carl Wolfston, the battle and ultimate breakup hit's a little closer to home. Wolfston said Cisco has been trying to court the Pleasanton, Calif.-based HP solution provider, but the VAR has so far kept its distance from Cisco.
"When you see the kind of discounts Cisco gives the big boys like AT&T, we just can't compete," Wolfston said.
Wolfston said he has been watching Cisco as it develops its UCS strategy, but so far has not been impressed.
"It's a bunch of fluff," he said. "Cisco is showing benchmarks that are faster than HP's, but with machines that are not available yet."
In the Cisco vs. HP fight, Cisco will be the company to take the bruising in the long run, Wolfston said.
"Cisco makes high margins on its networking products, but now it's going into the lower-margin server business," he said. "But HP is moving into the higher-margin network business. People are saying HP partners should be quoting HP networking gear and leaving the quote with the customer to see what happens."
The battle has reached the point that some HP partners are applauding the move by Cisco.
Mark Gonzalez, president of Nth Generation Computing, an HP solution provider, said he has been telling HP it has been too nice to Cisco, and that things will have to change.
Nth has already shut down its Cisco business completely, Gonzalez said.
"We've ramped up with ProCurve," he said. "We'll do Cisco if the customer insists. But we will ask customers, 'Did you know that ProCurve is compatible with Cisco? Did you know that ProCurve is less expensive than Cisco?' We even tell customers that if they really want to buy Cisco, get a quote from ProCurve anyway and use it to drive the Cisco price down."
Another solution provider, who preferred to remain anonymous, said it is not surprising to see Cisco cut HP off as a partner.
"It's war," that partner said.
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