HP Gears Up for Switch Price War

Hewlett-Packard Co.s (NYSE: HPQ) latest foray into the switch market looks set to spark a price war among some of the major vendors, according to Steven Schuchart, senior analyst at Current Analysis.

The hardware manufacturer today unveiled its latest ProCurve switch product, the 3400cl. At one-rack-unit high, the fixed configuration device comes with either 24 or 48 ports and two optional 10-Gigabit uplinks (see HP Launches Gigabit Switch Series).

When any new product is launched, one can expect a degree of hyperbole from the vendor. In this case, HP execs have been blathering on about how the 3400cl offers Layers 3 and 4 routing features at a Layer 2 price-point. And they may have a point, according to Schuchart.

"At the high end, HP’s edge products have mainly been modular, but not everyone needs a modular device,” he says. “It’s going to be [a question of] cost and what the users are familiar with."

HP is going after market leader Cisco Systems Inc. (Nasdaq: CSCO), specifically the Catalyst 3750G-16TD, which boasts 16 ports and one 10-Gig uplink. Illustrating Schuchart’s point, the big difference between the two units is cost. The base model 24-port 3400cl is on the market for $3,759, whereas the 3750G-16TD costs $19,995.True to form, Cisco declined to comment on HP’s latest attempt to win the hearts (and wallets) of its customers. But Schuchart believes that other vendors such as 3Com Corp. (Nasdaq: COMS) and Foundry Networks Inc. (Nasdaq: FDRY) could follow HP’s example. “I would expect that the other vendors will put price pressure on Cisco. In the fixed configuration market, there’s a lot of products that are made with merchant silicon.”

Of course, there is method in HP’s madness. The Palo Alto firm is using the likes of its ProCurve switches to entice users onto its Adaptive Edge strategy. A somewhat loosely defined networking initiative, the Adaptive Edge revolves around helping users control their networks from a central point.

With the launch of the 3400cl, HP is also banking on customer demand for 10-Gigabit Ethernet. But Max Flisi, research analyst at IDC, warns that this will be easier said than done. “As you push 10-Gigabit and Gigabit Ethernet out to the edge, the obstacle is getting people to actually use it,” he says. “The challenge will be making sure that customers see a return on their investment.”

Depending on users’ specific environments, this could be anything between six and 18 months, according to Flisi.

HP execs are staying tight-lipped about their long-term ProCurve strategy. When NDCF asked HP’s marketing manager Louise Bishop for an update on the switch technology acquired from Riverstone Networks Inc. (OTC: RSTN.PK) earlier this year, she was less than forthcoming (see HP Switch Deal Good for Users).”We will be giving some more information on that later [in the year],” she said. Bishop specified that there will be some news on the progress of the Riverstone acquisition in late November or early December.

— James Rogers, Site Editor, Next-Gen Data Center Forum