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HP, Cisco Dispute Meaning Of Latest Networking Market Share Numbers

HP is touting a new set of market share numbers as evidence that it is drinking Cisco Systems' milkshake by winning network routing and switching sales away from its more established rival. But a Cisco spokesman responds that with the proper perspective, HP's boast amounts to less than meets the eye.

HP is touting a new set of market share numbers as evidence that it is drinking Cisco Systems' milkshake by winning network routing and switching sales away from its more established rival. But a Cisco spokesman responds that with the proper perspective, HP's boast amounts to less than meets the eye.

HP on Monday shared research from Dell'Oro Group that showed that it "strengthened" its second-place position behind Cisco in the market for Layer 2 and Layer 3 Ethernet switches with a 12% share of the market, based on revenue, in the first quarter of 2011, up from 9.5% in the year-ago quarter. "We are one of the two vendors to have double-digit share in the switch market, which is the largest segment of networking," says Mike Banic, VP of global marketing for HP's networking business.

True, but HP's double-digit number is 12 and Cisco's is 68, according to data obtained directly from Dell’Oro.

"HP’s share is still very modest in this market," says Cisco spokesman David McCulloch, "so it’s relatively easy for HP to talk about making substantial gains when you think that before the acquisition of 3Com, they didn’t even have a switching business that could be considered enterprise-class."

HP and Cisco have engaged in a bitter rivalry since HP entered the networking equipment market--with the 2009 3Com acquisition--that Cisco has long dominated. HP touted a Gartner research report in November 2010 that sought to debunk the "myth of the single-vendor network," which was clearly targeted at Cisco. Cisco responded in April with its own whitepaper arguing that its innovations in network design, security, performance, service and other areas will address the future needs of network administrators better than what it called "the good-enough network" of rivals such as HP.

The rivalry is occurring in the context of bad financial news for Cisco, which reported a 17% decline in profits in its most recent quarter, shuttered its Flip video camera business and is cutting back other under-performing units. Bloomberg News reported Tuesday that Cisco may cut 10,000 jobs when it announces its next quarterly financial results in August, double the number of layoffs forecast by an industry analyst Monday. It currently employs 73,000.

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