HP guns for Cisco in A-Pac networking play

HP is making a post-merger play at capturing a number two position in the global network switch market by the end of 2003, claiming its hardware is at least 25 percent cheaper than competing switch gear from Cisco Systems.

The company has in the past had no sales and marketing drive for the networking business in the region, but is now on the hunt for specialist local networking focused reseller and systems integration partner to flog its gear.

During the late 90s, HP invested most of its marketing funds for the networking division in North America and Europe, due to the Asian economic crisis, said Mark Thompson, worldwide sales and marketing manager, of HP's ProCurve networking business. “There hasn't been people focused on networking [in the region],” he said.

HP is also rolling out its “Elite” networking partner program in the region in order to recruit system integration specialists in the networking arena, including Gold and Platinum Cisco partners. Thompson claimed the Cisco channel is saturated, causing an erosion of margins in the Cisco channel. He said channel partners selling cheaper HP switching gear can derive better profit margins.

HP's business networking sales and marketing manager for the region Paul Fischer, promised that the company wouldn't “over-distribute” which would cause heavy competition and eroded profit margins for its partners.

Thompson claimed that unlike Cisco and 3Com - which sit at number 1 and 2 in the switch market respectively - HP bundles lifetime warranty support with its product range. “Even if a successful Cisco reseller is driving a lot of revenue, it's probably not driving a lot of margin today,” he said.

He added that HP network hardware is consistently priced lower than Cisco and 3Com due to a lower cost of manufacturing and the use of smaller components such as boards and power supplies. He also claimed the HP line has fewer product “skews” whereby one HP platform covers three or four product families that exist in other vendor's product lines. He urged the local networking channel to consider HP because HP hasn't saturated the channel, the margins are better and partners don't have to discount as much to be competitive. HP's switch range starts with the 408b 8 port 10/100 unmanaged switch up to the enterprise-level 9315M, 9308M and 0304M switches.