VARs Applaud HP's 3Com Swagger But Cautious On Channel Effects

HP and 3Com VARs on Monday applauded HP's boldness in challenging Cisco with a 3Com-strengthened networking portfolio. But they also warned that the escalating rivalry between the two tech titans would continue to squeeze VARs that work with both vendors.

For 3Com VARs, the news was a long-overdue motivator. As a longtime 3Com solution provider, Glenn Conley, president and CEO of Metropark Communications, St. Louis, Mo., said he was "excited as all get out."

"If I can take the size and strength of HP and the ingenuity and cool products of 3Com and meld them together, then put a bull's eye on the biggest kid on the block, I'm saying yeah, it's a pretty exciting time," Conley said.

At the time HP announced the acquisition, last November, solution providers were concerned that HP would ignore hidden gems -- such as 3Com's voice portfolio -- during integration.

But HP executives confirmed during a presentation Monday that the entire 3Com portfolio would be preserved, and that both 3Com and ProCurve would become part of the new HP Networking group.

Conley said he hadn't yet heard much about how HP will transition 3Com VARs into its current programs and certifications; he and other 3Com VARs said they've been told June 1 is the HP-set deadline for details.

But he said HP was right to take its time.

"A lot of the 3Com-ers are just anxious to get into battle," Conley said. "They've been sitting on the sidelines now for a long time. Whatever [HP's] slowness is, they want to do right by the dealers."

Another big advantage for 3Com VARs, Conley said, is the possibility of expanding their practices to include other pieces of the HP portfolio.

"3Com always made several plays at having us take bigger bites of the apple, but they didn't give us the tools or the resources or the assistance to do that. If you were a data house, that's what you sold. If you were a phone company, you sold that," he explained. "If HP does it right, and they do offer the ability to take a bigger bite, well, Metropark and a lot of other dealers would like that."

Next: HP VARs Look To Spread Their Wings, Too

Other HP solution providers are eyeing the expanded networking options with similar curiosity. The acquisition of 3Com by HP is causing Enterprise Computing Solutions, which has until now focused mainly on HP's storage and server offerings, to look at bringing in more of a networking focus, said Dave Butler, president of the Mission Viejo, Calif.-based solution provider.

"We will look at what this means to us," Butler said. "We will be talking to customers as well on what it means to them, and how they look at it vs. Cisco."

HP's ability to compete against Cisco is strengthened by the kind of margins both vendors have historically enjoyed, Butler said.

"Cisco is used to higher margins, but now it will have to compete with HP with lower margins," he said. "HP is used to competing with Dell with margins. Cisco will have to compete now."

One solution provider who works closely with both HP and Cisco and who preferred to remain anonymous, said that it is now clear that the two vendors are at war with each other, and that solution providers risk becoming their pawns.

"They are competing now on all fronts," the solution provider said. "Before, we could to talk to both in a deal, and see cooperation in front of the customer. That hasn't happened in a while."

3Com fills in glaring holes in HP's networking lines, and both HP and Cisco can pretty much offer end-to-end solutions, the solution provider said.

"But they aren't best-of-breed solutions like we could do when bringing both vendors in," he solution provider said. "Cisco's compute products are not quite up to those from HP, and HP's ProCurve is not at the same level as Cisco."

HP and Cisco, along with other vendors like Oracle, are watching customers move towards adopting cloud computing models, and are currently in the process of putting together the technology to offer complete private cloud solutions, the solution provider said.

However, that in itself is only the starting point.

"Customers, instead of buying products from different vendors for their private clouds, will be getting bundles from single vendors at a better price," the solution provider said. "As a single vendor gets a customer's private cloud business, it can more easily extend the relationship to public clouds as that technology matures. They want to lay the foundation so that it's easier to extend the customer relationship to the vendor's mega-public cloud."

HP and Cisco are making it more and more difficult for solution providers to work with both vendors. "We now have to deal a lot more with political games," the solution provider said. "Before, they were partners. Now they are trying to make you a pawn in their games. The reseller is right in the middle."

However, the solution provider did say the fight between the two vendors will have some benefits, including more marketing dollars and more aggressive pricing from them.

Next: VARs - Cisco Should Be Scared

Solution providers argued that HP has more than enough tools -- from aggressive executives to financing programs -- to counter whatever Cisco throws at them.

"HP and Cisco are taking pot shots against each other," Butler said. "And [HP Executive Vice President David] Donatelli, being ex-EMC, is pretty aggressive."

Michael Goldstein, president and CEO of LAN Infotech, Fort Lauderdale, Fla., which partners with both HP and Cisco, says 80 percent of his networking business is HP ProCurve.

Goldstein said Cisco is missing a big opportunity by not matching HP ProCurve's lifetime warranty. That lifetime warranty has big appeal, he said, to cost-conscious small business customers, which HP's Donatelli and HP Networking Senior Vice President Marius Haas cited as a key area of focus Monday.

"That HP ProCurve lifetime warranty is big," Goldstein said. "That goes a long way with customers."

Goldstein said he found it difficult to bring the Cisco Linksys product into small business because many of his customers look at it as a retail product.

"We are starting to revisit the higher end Cisco products above the Linksys line," he said.

Goldstein says he sees both HP and Cisco as strong partners. "They are both good vendors," he said. "We'll continue to make a business decision on which product best serves our client's needs," he said.

Marc Sarazin, executive vice president of sales and marketing at AdvizeX Technologies, an Independence, Ohio-based solution provider and HP Preferred Elite partner, said that AdvizeX's 25-year partnership with HP inspires confidence that HP won't lead VARs astray.

"We have recently made a strategic decision to go to market with HP networking and not Cisco. I think each of those vendors' partners will make their own strategy that they use to go to market," Sarazin said. "We're also a big partner with VMware and we've gotten assurances from VMware and their team that they will continue to optimize for HP's blade system matrix."

HP also inspires confidence, some partners argued, because they outgun Cisco for pure breadth and depth of products.

"I think HP is in a better position competitively than Cisco is," said Simon Palmer, president of STA, a Tustin, Calif.-based solution provider and HP elite partner. "They've already made a significant investment. And I think we are heading towards a single data center chassis, in which you'll be able to plug in servers, storage and networking. I don't see an interoperable world going forward. The winners will be the ones who can plug into that chassis."

Metropark's Conley said the HP-3Com combination was the first time in recent memory that a true Cisco challenger was stepping up.

"It's a beautiful story, it really is," he said. "No one can say they can be both a No. 1 and No. 2 contender to the mighty Cisco. Before, you never went wrong with Cisco; no one got fired for buying Cisco. But before, there was no one with the size and girth of Cisco. 3Com? Shoretel? Seriously? But with HP, you're talking about a major player providing a major solution that's at a pretty good price."

Steven Burke and Damon Poeter contributed to this article