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Shifting gears, let's talk a little about the competitive landscape. I wanted to ask you specifically about three individual companies germane to this discussion, starting with HP. No secret your office circulated a memo to Cisco's sales force last fall describing how to look at HP as a competitor while it was playing defense. HP's management team has made it clear there's a long way left to go in terms of when they get their house in order, so how is Cisco taking advantage of that?
If you want to take a step back to any way we're looking at our competitive position right now, I'd start with innovation and end with innovation. The essence of what differentiates Cisco and HP today is that we have continued to invest in innovation, R&D and new technologies and architecture, and that's a challenge for HP, which I think they've recognized under their most recent leadership. All that was cut back under their previous leadership, and it's a longer-term task to reintroduce innovation to a company of that size and scope. That's a challenge.
Along the way, the various moves that HP looked at very much confused their partners, and that broke some of the significant trust that existed from the Compaq days and all of that. The challenge is a little bit of a lack of trust, and that the innovations have been lagging in the last five years.
We're just going to keep doing what we do. We're going to double down on these big changes we see happening. We focus on making new markets, and we have a very trust-based relationship around our strategy for the cloud. Again, when we mentioned confusion, when HP announced their cloud strategy to go more directly and build direct cloud offers, that's just another confusing part for the partners to understand. When we talked about our cloud plans last year and this year, we are enabling our partners to participate in cloud. HP is going to compete more aggressively with partners in delivering the cloud. That's another confusing message.
Some analysts over the past year had HP Networking in particular as making a few market-share gains against Cisco, but more recent reports from those same analysts show a lot of that shifting back in your favor. Was HP overhyped as a competitive threat to Cisco?
I never take anyone for granted as a competitive threat, and that's what makes it so much fun around here -- we have so many competitors. Right now the opportunity for Cisco is to gain significant market share and continue to expand our relationships with our partners. I meet with partners every week, every month and every quarter both here and when I travel, and their confusion [with HP] is allowing them express a greater interest in our data center strategy. The opportunity for Cisco right now is to do very well against HP, especially with our partners because of the current state of confusion and a lower trust level then we have seen in the past.
The second company is Huawei. John Chambers has publicly described Huawei as Cisco's most formidable long-term competitor, and Huawei is attempting to recruit enterprise channel partners here in North America. Why do we keep hearing about Huawei in the context of Cisco?
This is a company that's kind of like no other company in that they have built a very large presence in emerging markets and a very large presence in telecommunications. It seems now that some of their recent growth has slowed in these markets, maybe because cheap doesn't seem so cheap three years later. Now that we're seeing that, the logical shift to growth is into the enterprise.
The company has a reputational issue in terms of its history of integrity and is looking to enter those markets through the channel. That's the play. The problem is it also has an equally irregular pattern of partnering. Trust is relative to everything in the channel, and when partners look to Cisco, they see us deliver what we said we would deliver. They want us to be predictable, they want to know the plan of three to five years and feel the value of the business will be enhancing the business they're into.
Huawei is absolutely not part of their fabric. We have a culture of partnering here. Huawei has a culture opposite partnership. Look at some of the technology partnerships -- Symantec, got up and got disassembled, 3Com, got up and got disassembled. The differentiator here is how much trust would a partner put in this part of their business. Huawei presents a story that doesn't have the credibility; they do not have the culture of partnering when it comes to trust and integrity.
The third company I wanted to ask you about is Dell. They've made a lot of acquisitions targeting converged infrastructure. Do you consider Dell a major competitor to Cisco the same way you would HP as an end-to-end player?
No. Again, I think this goes back to the conversation we had about innovation. Dell was in a tough place where their business model had become that of an assembler. It didn't look sustainable. They entered the service business, they began to build a portfolio that was more complete based on customer requirements, and that was very logical for them to do. They've expanded their portfolio in areas where spending is existing, and that spending category is called networking.
So you don't consider Dell a major threat to Cisco?
No.
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