ANALYSIS: Cisco Tells HP Its Time To Rewrite Our Vows

Comes a time in every marriage where couples revisit the terms under which they made that solemn, binding commitment. For some it happens within the first year of a tumultuous marriage and for others after 25 years of wedded bliss.

What causes us to redefine our relationship? Well, there are as many reasons as there are stars in the sky. Probably the most common reason is a simple one. As a business school professor once told me, “Things change.”

And things have changed for Cisco and HP. HP is a Gold Certified partner of Cisco’s. HP acts as a systems integrator for some of the world’s largest enterprises and in that capacity presents Cisco solutions to those enterprises. But for a decade HP’s product houses have been making in-roads in the networking marketplace, in essence carefully picking away share that would have otherwise belonged to Cisco. In addition, HP has made acquisitions in the networking space including 3Com that give it a deeper product portfolio.

HP’s direction and intentions in the networking, data center and overall enterprise space require Cisco to rethink it’s Gold status for HP. Cisco’s channel partner program is affirming and supportive to its largest and smallest partners. However, that doesn’t mean Cisco is foolhardy about partner choices it makes.

If you were Ben & Jerry’s, would you want the head chefs for Häagen-Dazs knowing your future ice cream flavors and business strategies? Gold Certified partners of Cisco’s get intimate knowledge of Cisco product roadmaps and receive marketing resources and other incentives. Given HP’s intended position in the enterprise space, it makes little sense to us that Cisco would continue under its current arrangement with HP.

It’s also possible that Cisco anticipates a gradual decline of Cisco sales through the HP channel. This wouldn’t be all that surprising as the HP system integrator channel has more HP tools in its arsenal.

Will the marriage of Cisco and HP crumble? No. HP will still need expertise in Cisco solutions, those solutions being some of the dominant enterprise networking solutions in the world. At the end of the day, a system integrator bows to the vendor selection decision of the large enterprise customer. And if those enterprises demand Cisco networking or data center solutions, a smart channel partner will support the engagement.

All-in-all, we believe Cisco’s move to redefine the HP relationship a prudent business decision. Both companies recognize the value of partnerships and competition. Things have changed in their relationship and now’s a good time to craft an arrangement that recognizes the healthy enterprise competition between them.

Steve Hilton is the lead analyst for the Enterprise Solutions Program at Analysys Mason, which explores the needs of the enterprise, small business and SOHO ecosystems. He has 17 years of experience in technology and communications marketing. Prior to joining Analysys Mason, Hilton spent six years managing the enterprise and SMB team at Yankee Group. He also has held senior positions at Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). He has a bachelor’s degree in economics from the University of Chicago and a master’s degree in marketing from Northwestern University’s Kellogg School of Management.

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