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HP Throws Down The Gauntlet Against Cisco

HP is putting on a full court partner press to take down Cisco in the networking market and give customers relief from what HP's top US sales executive calls price gouging.

HP CEO Mark Hurd and the rest of the company's senior executive team this week are placing a full court press to get thousands of partners to go "All In" with HP in the networking market against Cisco. That means taking every chance to hammer home the benefits of partnering with HP vs. Cisco.

HP CEO Mark Hurd, and HP Senior Vice President of Networking Marius Haas, for example, are meeting Monday with several dozen of the most influential CEOs and top executives from the channel to ask for sales support in the networking market. Among those slated to attend: Logicalis CEO Terry Flood, 2E2 CEO Terry Burt, Tech Data CEO Bob Dutkowsky, and Insight CEO Ken Lamneck.

Not only that, Hurd is using the fact that the Interop conference, which focuses heavily on networking, is in town at the same time as the HP conference to meet with networking industry partner heavyweights who may not have looked at HP as a networking power in the past. All that changed, of course, when HP finalized its $2.7 billion acquisition of networking power 3Com earlier this month and detailed an aggressive campaign to unseat Cisco.

Randy Seidl, HP's senior vice president of the Americas, Enterpise Servers Storage and Networking, who is leading the charge against Cisco, makes no bones about where he sees HP vs. Cisco a year down the road.

"A year from now the difference will be (Cisco) UCS (Unified Compute System) is dead and we have had phenomenal market share growth in the networking space," said Seidl in an interview just before the HP partner conference kickoff. "And customers are thrilled and partners are making a lot of money."

"We are making sure we are rallying the HP troops and the partner troops to make sure we are going in and knocking on all the doors," says Seidl. He says that HP is on a no holds barred mission to aggressively disrupt the networking marketplace. "Whether you are an SMB, commercial or enterprise customer, it will be beneficial," says Seidl. "Now they have a viable alternative and choice."

Seidl says that Hurd's meeting with partners is critical as HP ramps up new sales resources, including networking solution architect resources to win deals against Cisco. "Mark Hurd is hosting a lot of the top networking partners in a full day summit roundtable discussion on what we are doing and how we are doing it," said Seidl. "Pleasantly enough, a lot of the partners that might otherwise have been in San Francisco at Cisco's partner event chose to come here."

Seidl says that HP is pushing hard into accounts with the message that Cisco has been price "gouging" customers and is going to market with a closed architecture versus HP's open architecture. What's more, Seidl says, HP is uniquely positioned to provide a full converged infrastructure solution that combines servers and storage along with networking. "We are the only company that has IP (intellectual property) across those areas," he says.

Seidl says HP is focused on providing customers some relief from what he calls Cisco's 70 percent networking margins that include robust annual services contracts. "It's amazing how upset customers are that they have really not had a viable alternative to Cisco in the enterprise networking space," he said. "I go on calls every week where they are very excited about the opportunity for us to help them."

Next: Battling The Cisco Tree Huggers


Seidl says that HP is finding success with CEOs, CIOs, and CFOs who want choice, but finding objections from Cisco "tree huggers" who have built a career managing Cisco networks.

At a recent large customer meeting, Seidl said the CFO, CIO and senior leadership technology leadership staff were "all fine with aggressively trying to get off Cisco and they felt they had enough power or control to help the tree huggers get their fingers off the trees."

Seidl, in fact, says top management at key accounts are 100 percent of the time excited to see a Cisco alternative. And, he says, "80 to 90 percent" are happy to see us be "aggressive to see what we can do to help."

Seidl compares the "FUD" (Fear, Uncertainty and Doubt) that Cisco like to spread in the networking market to maintain its stronghold to the same kind of tactics that IBM used 20-30 years ago in an attempt to at the time maintain its exorbitant mainframe revenue margins.

The big issue for partners selling HP networking versus Cisco networking solutions is the substantial increase in profitability that will come with the HP networking solutions, promises Seidl.

"It's a lot," says Seidl of the increased margins that partners will get by teaming with HP over Cisco. "The margin they get off Cisco is not as much as what our value proposition is. We have a stronger value proposition relative to the margins they can get. And we have a more mature, disciplined channel."

"If you are going to invest and work with us on large deals and opportunities, we have specific programs like Value Big Deals, Value Express where we are going to co-invest with partners," he says. "So per deal, they will make more money. And they will have a better chance of the deal actually happening."

It's all about "more margin per deal and a better (sales) hit rate," says Seidl.

Seidl won't talk specifically about how many deals HP is closing in the head to head battle against Cisco. But he says that it is "improving" even as the HP legacy sales team and partners get ramped up on the 3Com products.

Seidl is on a tear to make sure that HP and its partners are showing up and being more aggressive in each and every networking solutions opportunity. He says the biggest challenge HP faces lies not with products or solutions but rather with "executing on the sales side." He says the key for HP and its partners is showing up "earlier and faster" to compete for the business.

Bob Venero, the president and CEO of Future Tech Enterprise, a Holbrook, N.Y. VAR 500 power who opted to attend the HP conference rather than the Cisco partner conference, said Cisco should be concerned now that HP is getting aggressive in the networking market. "Is HP going to shut their business down? No," he said. "Is HP going to take a piece of that Cisco business? I think so. Just by default, people look for options."

As for HP networking sales growth, Seidl is confident. "We'd love it to be 100 percent HP networking everywhere," he said. "But if we get bread crumbs everywhere, we will have phenomenal growth."

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