HP Takes Aim At Cisco With Network Virtualization Offering

Hewlett-Packard has Cisco firmly in its sights with the launch of a new network virtualization offering that is aimed at moving telcos service providers to industry-standard hardware at a savings of 35 percent to 50 percent.

HP Monday formally launched at Mobile World Congress in Barcelona HP OpenNFV, its open-standards-based telcos service provider reference architecture, which is backed up with the launch of a number of HP OpenNFV labs and an extensive partnering effort to support NFV applications and services.

"I think this provides us an opportunity in the next two to three years to take significant share from Cisco," said Jeff Edlund, the chief technologist of Futures, Communications and Media Solutions Hewlett-Packard, who got the green light from HP's Executive Committee to go up against what he called Cisco and other proprietary network suppliers.

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HP is already pressing Cisco hard in the networking business. HP's networking business grew 4 percent year-over-year in the most recent quarter. HP's network switching business grew 5 percent compared to a 12 percent sales drop for Cisco in that networking segment.

Cisco's service provider business, in fact, was a big trouble spot for the company, with orders falling 12 percent for its second fiscal quarter ended Jan. 25.

HP says the NFV cost savings it is promising is resonating with customers. Alcatel Lucent, which is partnering with HP on OpenNFV, said the partnership enables Alcatel Lucent to "free up R&D investment dollars to focus more on innovative software technology" rather than hardware.

The 35 percent to 50 percent capital expenditure cost savings, depending on the licensing, have been demonstrated in HP proof of concepts over the last two years, said Edlund. "This is the total savings after all the business transformation costs have been netted out," he said.

The cost savings for VMware are more in the 35 percent range given VMware software licensing costs, said Edlund, while the KVM (Kernel based Virtual Machine) hypervisor is at the high end of the scale.

Page Murray, vice president of worldwide marketing for HP, said the NFV is another example of HP's ability to deliver the "right product at the right price at the right time. We are effectively bringing down the price per virtualized machine by 50 percent and the time-to-product by 47 percent. You are cutting the cost in half and getting it almost twice as fast. These are [HP] Moonshot- [server] like changes."

NEXT: HP Aims To Capitalize On A Landmark Telecom Shift

HP Enterprise Group Vice President and General Manager Bill Veghte has called the NFV opportunity "one of the single most significant shifts the telecommunications industry has experienced in 20 years."

HP CEO Meg Whitman, for her part, told CRN that NFV is "going to be the next big change at most of the major telcos, and we are really well-positioned here so we said this is a bet we should make."

As part of that big bet, HP has established a new NFV business unit, which will develop network virtualization technologies for carriers. That unit will be led by Bethany Mayer, senior vice president and general manager of HP's $2.5 billion networking division. The new NFV group will fall under HP's cloud organization, with Mayer reporting to HP CTO and cloud head Martin Fink.

HP has said the new NFV group is a "companywide initiative" that will span the work being done in HP's Cloud, Enterprise and Enterprise Services groups.

HP already has a well-established telcos service provider business that has 5,000 employees and is servicing some 130 carriers.

"This is about taking the carriers' proprietary appliance-based function they used in their networks and separating the software out of that proprietary appliance so that software can be run on commercial off-shelf systems," said Edlund.

HP's long history of providing telecommunciations solutions, industry-standard open server hardware, along with deep solution provider and independent software vendor expertise, gives the company an edge in the NFV stampede, said Edlund. "We have an offering that we feel like the rest of our competitors are going to have a tough time matching," he said.

Kelly Ireland, founder and CEO of CB Technologies, a Westminster, Calif.-based Platinum HP enterprise partner, said the NFV bet is an example of another HP game-changer like Moonshot server and the HP Haven big data platform that is setting HP apart from the competition. She credits HP CEO Whitman with restoring HP's innovation edge. "Customers can see the innovation," said Ireland. "They see HP's investments in R&D coming to fruition."