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It seems like Cisco basically forced HP to compete with its high-margin network gear business, since Cisco moved into HP's server territory earlier this year (h

by BobbyH 17y ago

It seems like Cisco basically forced HP to compete with its high-margin network gear business, since Cisco moved into HP's server territory earlier this year (http://www.nytimes.com/2009/01/20/technology/companies/20cisco.html http://www.nytimes.com/2009/01/20/technology/companies/20cis...). It looks like attacking a competitor's cash cow often results in the competitor attacking your cash cow?

SwellJoe 17y ago
I'll be curious to see how it shakes out for each of them. It seems to me, from my admittedly ignorant view, like opening the Russian front was to Germany for both HP and Cisco. I suspect it's going to hurt both of them in the end, maybe to a significant degree. HP isn't really the clear leader in their space, though, but Cisco has so little history and mindshare in the server space that it seems like a pretty evenly bad idea on both sides. I don't know who will eat into Cisco market share when they make mistakes or spread themselves too thin, but I'm sure that Dell is ready to step in whenever HP makes mistakes or loses focus (as has been happening for years). Anyway, I believe saying Cisco forced HP to do this isn't quite accurate. The other option for HP might have been to double down on their own strengths, and just kick ass while Cisco tries to figure out how to crack a market where they have no brand awareness (a Cisco is a router...everybody knows that...would you buy a roll of Kleenex paper towels?). Cisco could very easily spend themselves out of the running, since they'll have to spend a lot more on sales and brand awareness for their server line than HP will for the same impact. Even if Cisco is a better run company, which I do believe is true, they're signing on for an uphill battle.
- martincmartin 17y ago
  Yes, but it'll be good for everyone else, which more important. One of the most positive things about free markets is that competition lowers prices.
- CamperBob 17y ago
  HP can now sue practically everybody else in the market sector for infringing on what must be the mother lode of networking patents.
  - SwellJoe 17y ago
    You don't think it would be a MAD situation to sue Cisco over networking patents?
- jsz0 17y ago
  It's so much easier for Cisco to compete with HP than it is for HP to compete with Cisco. HP is competitive in access-layer switching and that's about it. No presence in big iron carrier class core gear, wireless, VOIP, security/IDS, CPE devices such as cable modems & IP set top boxes, infrastructure, SOHO consumer gear, etc. Meanwhile Cisco just has to slap together an X86 server, write some management software, and they've at least got a complete product line to compete with HP. I imagine HP is grabbing 3COM to make a push towards SOHO/consumer markets because 3COM isn't relevant in any of those above listed markets either for the most part. Cisco is more worried about Juniper, Brocade, Arris, etc. They are aggressively competing with Cisco in a lot of important markets. Cisco can offer a 40-50% discount and still be unable to compete with some of these companies on pricing. Unless you really need some screwball exotic feature set that Cisco offers you can find feature/performance parity easily. Interoperability between vendors is much better these days so there's less vendor lock-in and more acceptable of mixed networks. You might use Cisco in the core but go elsewhere for almost everything else.
azim 17y ago
One thing to note: HP has been in the networking business for almost a decade. Most of 3com's products aren't necessarily new to HP but will instead augment the existing portfolio. http://www.procurve.com/ http://www.procurve.com/

by BobbyH 17y ago

SwellJoe 17y ago

I'll be curious to see how it shakes out for each of them. It seems to me, from my admittedly ignorant view, like opening the Russian front was to Germany for both HP and Cisco. I suspect it's going to hurt both of them in the end, maybe to a significant degree. HP isn't really the clear leader in their space, though, but Cisco has so little history and mindshare in the server space that it seems like a pretty evenly bad idea on both sides. I don't know who will eat into Cisco market share when they make mistakes or spread themselves too thin, but I'm sure that Dell is ready to step in whenever HP makes mistakes or loses focus (as has been happening for years). Anyway, I believe saying Cisco forced HP to do this isn't quite accurate. The other option for HP might have been to double down on their own strengths, and just kick ass while Cisco tries to figure out how to crack a market where they have no brand awareness (a Cisco is a router...everybody knows that...would you buy a roll of Kleenex paper towels?). Cisco could very easily spend themselves out of the running, since they'll have to spend a lot more on sales and brand awareness for their server line than HP will for the same impact. Even if Cisco is a better run company, which I do believe is true, they're signing on for an uphill battle.

martincmartin 17y ago
Yes, but it'll be good for everyone else, which more important. One of the most positive things about free markets is that competition lowers prices.
CamperBob 17y ago
HP can now sue practically everybody else in the market sector for infringing on what must be the mother lode of networking patents.
- SwellJoe 17y ago
  You don't think it would be a MAD situation to sue Cisco over networking patents?
jsz0 17y ago
It's so much easier for Cisco to compete with HP than it is for HP to compete with Cisco. HP is competitive in access-layer switching and that's about it. No presence in big iron carrier class core gear, wireless, VOIP, security/IDS, CPE devices such as cable modems & IP set top boxes, infrastructure, SOHO consumer gear, etc. Meanwhile Cisco just has to slap together an X86 server, write some management software, and they've at least got a complete product line to compete with HP. I imagine HP is grabbing 3COM to make a push towards SOHO/consumer markets because 3COM isn't relevant in any of those above listed markets either for the most part. Cisco is more worried about Juniper, Brocade, Arris, etc. They are aggressively competing with Cisco in a lot of important markets. Cisco can offer a 40-50% discount and still be unable to compete with some of these companies on pricing. Unless you really need some screwball exotic feature set that Cisco offers you can find feature/performance parity easily. Interoperability between vendors is much better these days so there's less vendor lock-in and more acceptable of mixed networks. You might use Cisco in the core but go elsewhere for almost everything else.

azim 17y ago

One thing to note: HP has been in the networking business for almost a decade. Most of 3com's products aren't necessarily new to HP but will instead augment the existing portfolio. http://www.procurve.com/ http://www.procurve.com/