Cisco Rolls Its Eyes At HP Switch Trade-In Program

Cisco is shrugging off HP's newly debuted switch trade-in program, arguing that customers aren't looking to buy from vendors just because they offer a quick fix on pricing.

"Many competitors offer trade-in programs," said Rob Soderbery, senior vice president of enterprise switching at Cisco, in a statement e-mailed to CRN. "Customers have shown that they value sustained investments in innovation and an architectural approach that extend beyond point offerings or incentives."

HP on Monday debuted "A Catalyst for Change," a trade-in program through which solution providers can save 20 percent up front on list prices of HP A-series and E-series switches, provided they're also trading in eligible Cisco Catalyst or Nexus switches.

The program runs until April 30, 2011, and Frank Rauch, vice president, channel sales for HP's Enterprise Storage Server Networking (ESSN) group, told CRN that the program is a "call to action to our partners and customers."

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In a response to HP's challenge, however, Cisco's Soderbery insisted that Cisco is focused on portfolio investment.

"Consistently investing in R&D at levels above 10 percent of revenues -- including investments across the Catalyst portfolio in 2010 -- tells you where Cisco is focused," Soderbery said.

A Cisco spokesperson also pointed to data from Infonetics Research citing Cisco's Ethernet switching revenue up 36 percent year-over-year.

In interviews with CRN, HP solution providers applauded the program for being both aggressive and opportune.

"It certainly gets the attention of the customer and maybe creates that conversation that allows us to dive deeper into their business, understand what's happening in their data center and network and what it means from a business impact standpoint," said Marc Sarazin, executive vice president of sales and marketing for AdvizeX Technologies, an Independence, Ohio-based solution provider.

AdvizeX, a Top 20 HP partner, added HP Networking 18 months ago, and according to Sarazin the specific business has grown by triple digits quarter over quarter, with a full funnel.

"Customers are very receptive to the value proposition being offered by HP," he said. "This gives us one more arrow in our quiver to go to customers who are going through a refresh."

NEXT: Partners Like HP's Timing

John Convery, executive vice president of vendor relations and marketing for Denali Advanced Integration, a Redmond, Wash.-based solution provider, called the program "game-changing."

"I think the overall offering from HPN is compelling from the front-end to the back-end margins for the partner, growth goal bonus, spiffs for the sales professionals, and the value big deal pricing for the customer, plus the trade-in sweetener," Convery said. "HPN, under the direction from [HP executives] Dave Donatelli, Randy Seidl and Frank Rauch, is 'attack, take no prisoners.'"

Other VARs agreed HP had gotten their attention.

"Clearly it's intended to be a fire-starter," said one solution provider who carries both HP and Cisco. "It's not going to do much to change HP's reputation of competing on price, but they've set a pretty consistent agenda of getting in Cisco's face at this point."

The solution provider, who asked that his name not be used, added that HP's timing was impressive.

"It's mid-first quarter for them, and it's the end of the calendar year, too," he said. "They got their ducks in a row."

In a Tuesday note to clients, analysts from Raymond James & Associates described the move as indicative of an HP strategy to use "aggressive pricing to unseat incumbent vendors in key accounts."

"We view the announcement as further proof that HP plans to leverage its world class supply chain, low cost structure and portfolio breadth to drive more competitive pricing dynamics in the market," wrote analysts. "The timing of this promotion should also create a modest tailwind for capturing year-end budget flush dollars."