Cisco Sales Boss: Partners Don't Trust HP Or Huawei

Cisco's top sales executive took aim at several major Cisco competitors this week, saying that Hewlett-Packard, in particular, has lost trust with the channel thanks to an extended period of "confusion."

In an exclusive interview with CRN on the eve of the company’s annual partner conference, Rob Lloyd, Cisco's executive vice president, worldwide operations, said HP has also made matters worse with what he called a cloud strategy that opens the door for channel conflict.

"HP announced their cloud strategy to go more direct and built direct cloud offers," Lloyd said. "It's just another confusing part [of the strategy] 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 the cloud. HP is going to compete more aggressively with their partners in delivering cloud. That's another confusing message."

In sharp contrast, Lloyd said, Cisco has created "trust-based relationships around our strategy for the cloud." Cisco during last year's Partner Summit launched its Cloud Partner Program, organizing Cisco solution providers into cloud builders, cloud providers, cloud services resellers.

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"Along the way, the various moves that HP looked at very much confused their partners, and that broke some of the significant trust that had existed from the Compaq days and all of that," Lloyd. "Their challenge is a bit of a lack of trust."

Lloyd also characterized HP as a technology laggard, calling out HP’s pullback in R&D spending over the past decade as weakening the company’s ability to be an innovator.

It isn't the first time in the past year that Cisco executives, and Lloyd in particular, have taken aim at HP. The once-friendly technology companies have been increasingly bitter competitors since they began to encroach on each other's respective data center and networking turf about four years ago.

Last fall, in a much-discussed internal memo sent from Lloyd's office to Cisco field sales employees, Cisco highlighted how HP was "struggling to provide a clear direction and strategy, leaving employees, customers, financial markets, industry influencers and their channel thoroughly confused."

HP at that point had fired former CEO Leo Apotheker and installed current CEO Meg Whitman not one week earlier, and was still reeling from partner and industry reaction to a series of announcements made in August, including that it was considering divesting its enormous PC unit and would discontinue the much-ballyhooed TouchPad tablet.

Lloyd's comments come at a time where competition between HP and Cisco is continuously fierce, and Cisco is emerging from a painful corporate restructuring as, ostensibly, a more streamlined company less tethered to bureaucracy and more focused on core technology priorities.

Cisco executives have told CRN throughout the past year that Cisco will be more aggressive about calling out competitors publicly -- a break from Cisco's more traditional approach of not highlighting competitors so explicitly.

"We're just going to keep doing what we do, spending on R&D, private cloud, collaboration, data center and innovation," Lloyd told CRN. "We're going to double down on these big changes we see happening. 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 than we might have seen in the past."

NEXT: HP and Cisco Partners Weigh In

Solution providers that work with both Cisco and HP said each technology giant has its challenges, but the companies currently stand in marked contrast.

"Cisco isn't easy to work with, but they are getting easier -- and they're definitely easier to work with than HP," said a top executive at a major U.S. solution provider that works closely with both vendors, who asked that his name not be used. "I think that Cisco really did take the time to listen to the channel on how they needed to get to that level, and we have seen faster deal registration and we do have an easier time with things like quarterly planning. Cisco is at least aware of its major problems and we can have a conversation on what my business needs. I'm not sure you'd get a straight answer on that from HP right now."

"The go-to-market with HP and Cisco is like night and day," said another top solution provider interviewed by CRN for an HP cover story in February. "We spend a lot of time fighting with HP management in reference to HP taking something direct. I can't remember the last time I had a conversation like that with the guys at Cisco."

But Kevin Hooper, vice president of HP Networking sales, Americas, said Cisco's description of HP partner confusion is simply wrong.

"I wholeheartedly disagree that there's any confusion on the part of channel partners," Hooper told CRN in response to Lloyd's comments. "Partners are very clear about what we are attempting to bring to market and have been instrumental in our growth. Just last quarter alone we gained 100 net-new logos -- net-new customers that came from somewhere else other than HP into HP Networking. All of them came from business partners."

Hooper, a longtime channel executive who was named to his current role in February, said that solution provider adoption of HP's FlexNetwork converged infrastructure strategy, HP's CloudSystem Matrix data center play, and cloud initiatives like the launch of HP's partner-led Cloud Centers of Excellence were proof positive that HP's cloud strategy is "all encompassing" for partners.

"The notion of cloud is very, very important to everything HP does. For cloud to be effective, you have to have a strategy for how you're going to transport data around an enterprise," Hooper said. "[For partners], it all depends on where you fit into the business strategies -- what is your chosen path to the cloud, if you like. We offer a 21st century solution to a set of 21st century problems."

Partners expect the Cisco-HP conflict to widen as more cloud-centric deals are won and lost, and say it's healthy for both vendors to embrace it.

"Our job is to delight the customer," said John Convery, executive vice president of vendor relations and marketing at Denali Advanced Integration, a Redmond, Wash.-based solution provider and Cisco Gold partner. "For that, we need to have a full portfolio of solutions, and I think both Cisco and HP understand that."

"I think Cisco is acknowledging competition, which they didn't always previously," said Kent MacDonald, vice president of business development for Long View Systems, a Calgary-based solution provider and Cisco Gold partner.

Both Denali and Long View have sizable HP practices. According to MacDonald, Long View has seen increased HP sales to enterprise customers with HP's CloudSystem Matrix as well as with various Cisco UCS-based configurations.

The pressure from other vendors has made Cisco sharper, he said.

"They're more aware of the competition now and in making sure they are positioning the right product, and aware of price point challenges. They are executing well against HP," he said.

NEXT: Cisco's Lloyd Tackles Huawei and Dell

Cisco has become more explicit when calling out it major competitors like HP, but lately, it's spent as least as much time calling out Huawei, the Chinese telecom giant starting to build an enterprise presence in North America and other parts of the world.

Cisco CEO Chambers Chambers has highlighted Huawei as Cisco's most formidable long-term competitor, and in a Wall Street Journal interview earlier this month, needled Huawei for not always "playing by the rules" when it comes to intellectual property protection.

"This is a company kind of like no other company, in that they have built a very large presence in emerging markets and built a very large presence in telecommunications," Lloyd told CRN when asked about Huawei. "It seems now that some of their recent growth is slowing in these markets, and we're seeing that cheap isn't so cheap after all, so the logical shift for growth is into the enterprise."

Huawei does not have a reliable reputation for partnering, Lloyd said.

"The company has a reputational issue in terms of its history of integrity, and it's looking to enter those markets through the channel," he continued. "The problem is that it also has an equally irregular pattern of partnering. Trust is everything relative to [partnering]. Partners look at Cisco to deliver what we said we would [deliver]. They want us to be predictable, and they want to know the plan for three to five years and and feel that value of the business will be enhancing the business [they're] into."

Huawei hasn't demonstrated to partners that it deserves that trust, Lloyd argued.

"Huawei is absolutely not part of their fabric. We have a culture of partnering here. Huawei has a culture opposite partnering," Lloyd said. "Look at some of the technology partnerships -- Symantec, it got up, and got disassembled; 3Com, it got up, and got disassembled -- much to the disadvantage of the companies that assembled them. The differentiator here is how much trust would a partner put in this part of their business."

Reached by CRN, William Plummer, vice president of external affairs for Huawei, called Lloyd's comments "unfortunate."

"Huawei has thrived in an open and competitive global market, and our success is a direct reflection of the longstanding and trusted relationships with the customers and suppliers and channels we have in over 140 different markets," Plummer said. "Those are facts about trust. That a world-respected industry peer would suggest otherwise is unfortunate. From the Huawei perspective, we would prefer to compete on the world-proven quality and integrity of our solutions."

Many Cisco partners are only beginning to see the Huawei conflict up close.

Frank Scanga, executive vice president of business development for Axispoint, a New York-based Cisco Silver partner, said Axispoint has been contacted by Huawei but said the company's overtures hadn't been as forceful as some other solution providers had described.

"We've seen nothing very aggressive but I get phone calls all the time from HP and Adtran, too, because they know of our Cisco business in this region," Scanga said. "Any time there is competition you get concerned, but we help carry the torch for Cisco and will continue to have an exclusive Cisco business in this area. I mean, you'd also add the complexity of trying to be an expert in yet another product line, so we're going to stay loyal to Cisco."

Lloyd told CRN that Cisco's dominant market position means there will always be lots of competitors. One emerging competitor he isn't worried about, however, is Dell, which has sharpened its converged infrastructure chops thanks to a series of recent acquisitions of companies such as Force10 Networks, Wyse Technology and Clerity Solutions.

"Dell was in a tough place where their business model had become that of an assembler -- really, a CRM company with an assembly back office. It didn't look like it was sustainable," Lloyd said. "They entered the service business, they began to build a portfolio that was more complete based on customer requirements, which was very logical for them to do. They've expanded their portfolio in areas where customer spending exists, and that spending category is called networking."

Does Lloyd consider Dell a major Cisco competitor?