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HP Says It's Getting Larger In Cisco's Rear-View Mirror

HP is responding to a Cisco Systems study that says HP's networking equipment is not as cheap as HP claims by sharing industry figures that show HP's message is resonating with Cisco customers, a third of which are reportedly switching to HP. At the same time, soon-to-be-published survey results from InformationWeek show that, while Cisco maintains a commanding lead in networking market share, awareness of HP as a credible alternative is growing.

HP is responding to a Cisco Systems study that said HP's networking equipment is not as cheap as HP claims by sharing industry figures that show HP's message is resonating with Cisco customers, a third of which are reportedly switching to HP. At the same time, soon-to-be-published survey results from InformationWeek show that, while Cisco maintains a commanding lead in networking market share, awareness of HP as a credible alternative is growing.

The rivalry between HP and Cisco has intensified in recent months (amid dueling research reports and industry stats in the networking space) since HP became a direct competitor to Cisco following its 2010 acquisition of 3Com. Because HP, with $122 billion in revenue, has substantial product development and marketing resources to throw into the networking space, analysts say it is in the best position, compared with other equipment vendors, to challenge Cisco’s ($40 billion in revenue) share of the Ethernet switch market.

According to Dell’Oro Group, Cisco’s share, based on revenue, stood at 67.7% in the second quarter, compared to HP’s 11.9%. While confirming the numbers, a Dell’Oro analyst says it’s too early to tell what impact HP will have on Cisco over the long term.

An upcoming InformationWeek survey shows that when IT customers were asked which brands of LAN equipment they "use, have used or have evaluated in the last 12 months," 84% mentioned Cisco and 33% mentioned HP, an indication of growing awareness of HP as an alternative. "It is yet another proof point of our leadership and the momentum we are seeing in the market," says Kash Shaikh, director of product marketing for HP Networking.

Shaikh also cited the results of a second quarter survey of Cisco resellers by the investment firm Robert W. Baird & Co. The survey showed that 75% of resellers said HP had "influenced" Cisco deals, which he said meant that the customer was "seriously considering" HP. In 33% of those cases, Baird reported, HP ultimately won the deal. HP also points to the Gartner 2011 Enterprise LAN Magic Quadrant report, which puts HP right next to Cisco in the much-vaunted category of "leaders" in comparing multiple vendors in a particular space.

In addition, Shaikh challenged Cisco’s dismissal of HP as offering just a "good-enough network" by citing the faster performance metrics of new HP products. Shaikh adds, "Cisco oversells and overprovisions the network, which Cisco does to maintain its market share, but they don’t consider what is right for the customer."

The survey from InformationWeek--which, like Network Computing, is published by United Business Media--has some other encouraging news for HP, but it also documents how strong Cisco’s incumbent position is. The survey of 444 IT professionals was conducted in July.

For instance, while 25% of respondents said they were considering adding another vendor and 10% were considering replacing their primary vendor, 60% were not considering any such changes, which would seem to favor Cisco. However, when those considering a vendor change were asked why, 47% said it was to achieve "substantial capital cost savings," which would seem to favor HP.

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