Fallout from Cisco, HP split

Cisco could face near term struggles as data centers stick with HP servers

The IT world has been abuzz the past week on word that Cisco cut ties to HP as a reseller and integration partner. This had been expected ever since Cisco launched its own data center blade server offering to compete with HP's and IBM's, among others. 

Technology Business Research (TBR) is the latest to chime in on the implications of the Cisco/HP split and has some interesting observations. For one, TBR alleges that HP may have actually instigated the conflict by dedicating more effort and resources behind its ProCurve networking business after Mark Hurd took over as CEO. Then once Cisco's Unified Computing System was unveiled, HP went on its own offensive by publicly bashing the platform and Cisco's intentions with it, swiftly lining up Cisco competitors Brocade and Alcatel-Lucent as tighter partners, and acquiring 3Com. 

One question: wouldn't HP have gotten wind of UCS development before it decided to dedicate itself more completely to ProCurve? Wouldn't the realization that networking partner Cisco was eventually going to become server competitor Cisco drive HP to build up its own networking operations and resources? 

But TBR believes Cisco stands to lose more than HP in the short-term from the split: 

Large organizations are more likely to purchase servers from market leader HP rather than new-kid-on-the-block Cisco, and many may be persuaded to buy networking gear from HP or another Cisco competitor such as Brocade.

But as UCS gains acceptance and traction - Cisco claims to have 400 customers to date for the platform, and expects $1 billion in revenue this year - its appeal will increase as well, TBR notes. That initial appeal will be from smaller companies and greefield data center opportunities, and then expand into larger enterprises, which will impact HP. 

Each companies' channel partners, meanwhile, will obviously be trained on the others' respective server and networking lines, and then offer those that best fit the needs of their customers. What remains to be seen, according to TBR, is whether Cisco chooses to go the same route with IBM and Dell. 

The IBM relationship appears to be intact, albeit perhaps a bit more tense. IBM, for instance, is reselling Cisco's Nexus 5000 FCoE switch. Cisco and Dell, meanwhile, have reportedly scrapped a server/switch project. 

But HP and Cisco, despite the public divorce, still have to "play nice" for the time being, TBR notes: 

The revenue streams received by both companies through the partnership are too significant to simply cut off...they share many enterprise customers with whom they have very strategic relationships. Therefore, it behooves each company to "play nice" for the time being to avoid any negative impact on their customers' businesses.

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