News

Cisco Pulls Plug on HP Partnership

• By Jeffrey Schwartz
• 02/19/2010

In move that is likely to escalate the rivalry between two former partners, Cisco on Friday said it is cutting ties with Hewlett-Packard Co.

Cisco said it has informed HP that it will not renew its System Integrator contract when it expires on April 30 of this year, meaning HP will no longer be a Cisco Certified Channel or Global Service Alliance partner. 

The move comes as both companies continue to encroach on each other's turf: Cisco last year said it would develop blade servers, and HP responded in November by agreeing to acquire 3Com Corp. Just last month, HP and Microsoft extended their 25-year pact to jointly develop advanced datacenter technology and private clouds and offer bundled enterprise solutions.

Given the nature of the partnership between HP and Cisco and the competitive rivalry that has evolved between the two, Cisco decided to pull the plug on their go-to-market and technology integration pact.

"We are taking this action to be transparent to both partners and customers -- we will compete with HP for future business," said Keith Goodwin, senior VP for Cisco's worldwide partner organization, in a video message. "Being a Cisco Certified Channel Partner has numerous benefits including access to proprietary information (such as product roadmaps) and partner profitability initiatives. Given the evolution of our relationship, it simply no longer makes sense to provide these benefits to HP."

HP fired back at Cisco, saying many competitors cooperate with one another. "History has proven that customers and the market demand both co-opetition and collaboration between IT vendors," the company said in a statement. "Most major players compete in one deal and partner in others to best serve clients' needs. We do not believe it is in the customer's best interest to take a proprietary stance."

Despite the relationship being severed, HP said it would continue to offer consulting, integration and management support for all hardware, software and networks.

Brandon Harris, vice president of HP solutions at Logicalis Inc., a partner of both companies, said he wasn't surprised by the move. "It will continue to be more competitive out there," Harris said.

"[This is] pretty...normal corporate behavior in an unregulated market," said Directions on Microsoft analyst Paul DeGroot. "It was Cisco that realized that its alliance program was too all-or-nothing, and it may need a more nuanced approach to ensure that joint customers get the support they require, while the other partner doesn't get privileges that it doesn't need for mere interoperability purposes."

Gartner analyst Tiffani Bova said she wouldn't be surprised to see the two companies iron out their differences eventually and come up with a more mutually acceptable pact.

"With the proprietary information including product roadmaps and pricing promotions Cisco shares and offers its partners, it is no surprise the nature of the relationship had to change," Bova said in an e-mail. "For both Cisco and HP partners, the investments required to carry both brands effectively may become too expensive and time-consuming, so rationalizing (return on partnering and profitability) each relationship will become more critical as time goes on."