Why HP ProCurve is dismantling Cisco's market share on a deal-by-deal basis

It's my opinion that Cisco's loss of share has in itself become the networking industry's newest market transition.

I spoke on the phone today with the Americas Vice President and General Manager of HP ProCurve - Karl Soderlund, and learned why HP ProCurve is dismantling Cisco's market share on a deal-by-deal basis, for instance: If you trade-in your Cisco equipment, HP ProCurve will take 20% off its list price. By doing so, I feel that HP ProCurve is whacking Cisco in its most vulnerable spot, its lack of pricing flexibility. And why does Cisco lack pricing flexibility? Well, mostly because Cisco VARs no longer have any margin left to profitably match HP ProCurve pricing on a deal-by-deal basis. Furthermore in my opinion, while Cisco salivates over 30 to 50 new market adjacencies, Cisco's loss of market share has in itself become the networking industry's newest market transition. It appears HP ProCurve is calling the shots now, because during my conversation with Soderlund, he knowingly stated, "We’ve seen Cisco offer price-matching discounts to existing customers in order to equal ProCurve prices – and react to ProCurve’s momentum and market share gains. ProCurve wants to make all Cisco customers aware of this offer, giving every existing Cisco customer a discount, simply by contacting ProCurve to participate in the deal. "HP ProCurve continues to win business and gain market share through increased awareness in the market. Customers and partners are becoming aware of the tremendous benefits HP ProCurve provides by offering the best value, and in this current economic climate, more companies are forced to look at alternative solutions in order to find the best innovation and best price. Those customers are re-evaluating their total cost of ownership and are turning to HP ProCurve. "HP ProCurve is the price performance leader and has a TCO that no competitor can match. We've built our business around it. We’re currently offering VARs and end-users a variety of incentives to help them win more deals, but overall, we’re not changing anything, we’re executing on our existing strategy."

Cisco's Value-Based Approach According to Wendy Bahr - Senior Vice President for Cisco U.S. and Canada Channels:

"Our partners embrace the value-based approach. By knowing they will be rewarded for the value they deliver to the customers, not the volume they deliver to the vendor, our partners have the confidence to build their businesses around solving customers’ toughest issues and addressing their greatest opportunities. Over the years, that value-based approach has been absolutely critical to enabling our partners to lead Cisco into a half-dozen new markets. It won’t come as any surprise that the value-based approach is also central to our moves into 30 new adjacencies, including the data center, collaboration, and energy-efficient network design."

My interpretation of the above quotes from Ms. Bahr: In previous years, partners led Cisco into a half-dozen new markets, however, this time it's going to be Cisco itself that will lead partners into 30 new adjacencies. Meanwhile, a ChannelWeb article appears to backup my notion that HP ProCurve is dismantling Cisco's market share on a deal-by-deal basis. Related stories: Robert Lloyd, most likely successor to Cisco CEO John Chambers goads channel partners to wallop HP ProCurve HP ProCurve wrestles Cisco with new tag teams Cisco distributor says customers demanding HP ProCurve

What's your take, can Cisco VARs profitably match HP ProCurve pricing on a deal-by-deal basis? BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese | Twitter: http://twitter.com/BradReese

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