Cisco VARs: Split With HP No Surprise, But Welcomed

Cisco partners are rejoicing the networking behemoth's planned move to drop Hewlett-Packard (HP) as a channel partner, noting that it will eliminate one massive competitor in HP while also making them more valuable to customers.

"For us, it actually uncomplicates life and puts us in a better position," said Kent MacDonald, vice president of infrastructure solutions for Long View Systems, a Calgary-based Cisco and HP partner.

MacDonald said Long View sells HP servers and some HP ProCurve networking gear, but Cisco dominates its networking sales. The elimination of HP as a Cisco partner opens the door for Long View to set a clear path for customers: HP or Cisco.

"It makes things the way they should be," he said. "And it lets the channel help the end user."

Cisco on Thursday revealed that it would not renew HP's contract as a Systems Integrator when that contract expires on April 30, 2010, meaning HP will no longer be a Cisco Certified Channel or Global Service Alliance Partner. Basically, HP will no longer be authorized to sell Cisco gear and services and won't be privy to roadmap and early product information.

Cisco kicking HP to the curb comes as the two tech powerhouses continue to butt heads and compete for business and their former amicable relationship sours.

"Over the last few years our relationship with HP has evolved from a partner to companies with different and conflicting visions of how to deliver value to customers," Cisco Senior Vice President of Worldwide Channels Keith Goodwin wrote in a blog post announcing the breakup. "Despite this shift in industry dynamics, HP had remained a Cisco Certified Channel Partner. Being a Cisco Certified Channel Partner has numerous benefits including access to proprietary information (such as product roadmaps) and partner profitability initiatives. Given the evolution of our relationship it simply no longer makes sense to provide these benefits to HP."

Cisco would not comment about the split beyond Goodwin's post and accompanying video. Goodwin added that Cisco and HP have started a dialogue to see how they could work together going forward with a different arrangement.

For Cisco partners, however, the eradication of Cisco's and HP's partnership is somewhat of a blessing, as it eliminates one of their largest competitors in HP.

"HP won't be a competitive Cisco partner anymore, so in that way it's a benefit," said Bob Cagnazzi, CEO of BlueWater Communications Group, a New York-based Cisco partner. "They were a big partner. From a competitive standpoint it's good."

Long View's MacDonald agreed.

"When HP was selling Cisco, HP was competing against us," he said. "We'll no longer see HP as a reseller of Cisco."

It's unclear how much revenue HP generates through Cisco sales, but partners suspect that that amount has flattened or dipped as Cisco's and HP's roughly two-decade relationship has become more frosty.

MacDonald added that the divorce also allows both Cisco and HP, and their respective partners, to send a clearer message to customers that they are no longer working together and that they are indeed true competitors. There will be no more mixed messages, he said, as HP focuses on ratcheting up its networking profile via ProCurve and the recent acquisition of 3Com and its H3C line of networking switches.

NEXT: Is This The Final Blow In Cisco's And HP's Feud?

Cagnazzi, too, said that HP had been playing a well-orchestrated balancing act between friend and foe, and it's about time Cisco put a stop to it.

"They were Cisco partners where they had to be and they were competitors where they had to be," he said.

Cisco dropping HP as a partner follows a nearly year-long trajectory that saw Cisco's and HP's relationship evolve from friendly competition to utter enemies as the two continued to take different pages from the others' product playbook. First, HP gained market share with its ProCurve networking gear. Cisco battled back launching the Unified Computing System (UCS), a data center virtualization and blade server play that eats into HP's established wheelhouse. From there, HP teamed with Microsoft for VoIP and unified communication to take on Cisco.

At Cisco's Partner Summit last June the battle reached a crescendo with Cisco channel executives publicly calling out HP as its true competitor. Cisco took the gloves off and prepared for a bare-knuckle brawl that included calculated jabs from both companies and forcing some partners to choose sides.

Ken Presti, founder of Presti Research & Consulting, said the Cisco-HP split gives partners on both sides the ability to tell a stronger story.

"If I were an integrator I would be rubbing the palms of my hands together briskly right now," he said.

While Cisco and HP parting ways may create a new competitive dynamic, "it opens a door for the Cisco channel to exploit, but they will win or lose deals based on their own savvy, services footing and what they can bring to the table," Presti said.

As the feud continues and Cisco's and HP's partnership fizzles, many partners feel it was only a matter of time before Cisco jettisoned HP has a channel partner.

"It was certainly a long time coming," Cagnazzi said. "While they've both entered markets that the other was a leader in, Cisco faced the greater long term risk in continuing the relationship. HP clearly does not share Cisco's vision of the network's key role in the future of delivering IT services. As a Cisco partner I'm glad they're doubling down on the companies that are investing in, and taking to market, their vision."

MacDonald added: "I thought it would have happened sooner."

Still, this isn't the final blow in the epic Cisco vs. HP battle royale that has continued to snowball. And partners and industry watchers wonder what's next.

"HP is not going to take this lying down," Presti said, adding that as Cisco and HP work on a new agreement the ultimate goal will be to protect customers, especially those that use both Cisco and HP gear.

"It's like a divorce," BlueWater's Cagnazzi said. "Who knows how messy it's going to get?"