HP-Cisco Divorce Recalls HP-EMC Breakup
Joseph F. Kovar
Anyone trying to assess the potential aftermath of the very public divorce going on between Hewlett-Packard and Cisco might be able to gain some insight from the public split nearly 11 years ago between HP and EMC.
In a clash over future directions in data center infrastructures, Cisco last week said it is officially cutting HP as a reseller partner and HP responded by calling that decision a move towards "proprietary" infrastructures not in line with customer requirements.
That split was in many ways similar to the 1999 split between HP and storage vendor EMC over disagreements between the two over storage branding.
HP, which until recently was one of Cisco's largest resellers, was in 1999 EMC's largest reseller. And like the HP-Cisco split, the breakup between HP and EMC tore up long-term channel relationships, forcing the vendors to forge new channel partnerships and forcing their solution provider to choose which vendor to support going forward.
The biggest lesson that can be learned from the HP-EMC divorce, however, is that two IT industry heavyweights can recover from the messy situation. Just like HP and EMC have since 1999 have become dominant players in multiple parts of the IT market, it can be expected that HP and Cisco will continue to be prime movers in the data center.
Since the HP-EMC breakup, the two vendors have become leaders in the IT market.
HP is now the world's largest IT company and a market leader in many parts of the market. It is consistently listed among the top five storage vendors thanks to its leadership in the server market and a combination storage technology it got with the acquisition of Compaq and an continuing OEM relationship with HDS.
EMC, meanwhile, remains the largest storage vendor thanks in large part to indirect sales channels which account for about one-third of its revenue, including the majority of sales of its Clariion and Iomega lines, both of which were acquired after the split with HP. EMC has also since branched out into security, document management, and other parts of the IT market via several significant acquisitions.
However, there is one key difference between the 1999 and the 2010 breakups. Whereas HP and EMC fought over how storage would be sold, they fought for their own part of that particular business.
For HP and Cisco, the stakes are higher. There is no single point of contention, such as storage, between them. Instead, they are fighting over the future direction of data center infrastructures, which has the potential to impact a wider range of technology and channel partners.
Next " Deja vu? The story behind the 1999 HP-EMC divorce
Prior to that breakup, HP was the largest reseller for EMC's enterprise storage business. However, HP started insisting that the EMC storage it sold be given an HP brand.
That led in May of 2009 to HP signing an OEM deal with Hitachi Data Storage under which HDS would rebrand its model 7700E array as the HP SureStore E Disk Array MC256.
That move helped accelerate EMC's decision to gradually move from its direct sales model, which at the time was known as one of the most aggressive in the industry, and adopt a more channel-friendly model that began with courting HP solution providers who had sold EMC in the past.
The divorce between the two long-term partners became final on June 21 when HP officially canceled its reseller agreement with EMC.
The following month, EMC won a court injunction against HP that forced HP to rename the array it was OEMing from HDS.
The array, originally named the HP SureStore E Disk Array MC256, was sometimes referred to as the "E MC256" array. EMC at the time objected to the use of the three letters "E," "M," and "C," calling it an insult to EMC customers. HP countered that "E" stood for the "Equation" architecture unveiled two months earlier, while "MC" was a long-term HP name for its mission-critical products.
In August 1999, EMC acquired Data General, which gave it the midrange Clariion line of storage arrays and solidified EMC's position as the storage market leader.
The split between HP and EMC had a much stronger impact than what can be expected from the split between HP and Cisco, said Dave Butler, president of Enterprise Computing Solutions (ECS), a Mission Viejo, Calif.-based solution and partner to both HP and Cisco.
ECS back then brought EMC storage into all its HP accounts, and EMC at the time represented about 40 percent of ECS's business, Butler said.
"Now all of a sudden we had to bring in HP and HDS," he said. "You just don't come in and expect to rip out existing storage. There was no easy answer. For us, the Cisco-HP battle is not as substantial."