HP VP: Networking Battle Against Cisco Yielding Astronomical Sales Growth

Hewlett Packard Vice President Phil Walton Friday said HP is seeing an astronomical 2,000 percent sales growth explosion in its networking business as a result of its full court press against market leader Cisco.

"Our networking business is growing by 2,000 percent," said Walton, who oversees financial industry sales for HP's enterprise group. "It is absolutely incredible. It is really growing like crazy!"

Walton, who oversees the financial industry sales segment for HP's enterprise business, made the comments in an interview with CRN after a keynote session at $263 million solution provider NWN's sales kickoff conference.

The whopping 2,000 percent sales growth includes a wide range of HP networking products from the edge of the network to the core of the network in the data center, he said.

Among the major HP Networking wins are deals, Walton said, with Coca Cola, Walmart, Fidelity and Goldman Sachs. And, he said, there are other significant networking wins that are soon to be announced by HP. He said HP currently has 400 networking proof of concept pilots going on with customers.

Walton's comments come after Cisco shares plummeted 14 percent Thursday after the networking leader reported year-over-year declines in switching and routing revenues for its second quarter. That's the heart of the market that HP is attacking with what it has called an all-out attack on Cisco's 80 percent networking margins.

’The company is clearly losing share in two significant product categories, with switching sales down sequentially for three consecutive quarters (down 10.8 percent quarter-over-quarter in fiscal Q2) and router sales declining 8.9 percent quarter-over-quarter,’ wrote Troy Jensen of Piper Jaffray in a research note after the Cisco results. ’The combination of margin erosion and market-share losses has turned us neutral on the stock.’

Walton, for his part, said that HP's new converged infrastructure networking technology is reasonating with customers. This in market, he said, where Cisco up until now has not had a clear major competitor. "The dual vendor strategy is really taking place," Walton said, noting technology consultants are advising customers to do deep dive head to head comparisons between Cisco and HP.

The message, he said is simply: "You have dual vendor strategies in the server market, the storage market. But you don't have it in networking. Look at HP. They compete with Cisco in the marketplace. Have a dual vendor strategy whether you have Cisco in the core and HP on the edge. That's OK. They can cohabitate."

Next: HP Promises 40 Percent Savings Vs. Cisco

Walton said that HP is showing a 40 percent savings on every account that it does a "deep dive" networking workshop with and goes head to head against Cisco.

HP's $2.7 billion acquisition last year of 3Com thrust the $126 billion computer giant into the core network business directly competing against Cisco. "We now have the capabilty to run an entire network for any corporation that is out there," said Walton.

Walton said one of HP's biggest showcases for its networking business is its own "Cisco free" worldwide network that encompasses six data centers around the world. He said that transition to an all HP network was completed by HP in six months with zero network downtime. What's more, he said, the new HP network has four times more bandwidth.

Walton urged NWN sales reps to attend one of HP CIO Randy Mott's forums on how HP itself went Cisco-free. "It's just an incredible story what we were able to do with our six major data centers which supports 340,000 employees around the world," he said. "It is now Cisco-free, an all HP-network."

As for HP's go to market strategy, Walton said HP is incenting its direct sales and services teams to work directly with partners like NWN.

"From a selling motion, we want to make sure that whether we are selling direct, whether it be a cloud service or whether it be a technology that we are working with you to drive into our customers everything that we handle," he said.

"What we have is the expertise to really drive the converged infrastructure story," he told NWN sales reps. "We have got the strategy. We have got the capability. We have got the outsourcing capability. So when you talk about our compensation systems. Every single one of my account general managers whether it be on Bank of America or Citigroup, they are compensated on every single thing that HP sells across (HP) ESSN (Enterprise Storage, Servers Networking), (HP) Software, (HP) TS (Technology Solutions), (HP) Enterprise Services."

Walton urged NWN sales reps to become familiar with HP's Business Value Framework sales methodology. That methology is aimed at getting sales reps to address the key performance indicators such as earnings per share or EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) that are driving customer decisions at the highest levels of a company.

"The more that you understand the selling motion of our account general managers and our account managers the easier it will be to work with us and drive more volume to every single one of our customers," said Walton.