When Cisco Systems (Nasdaq: CSCO) first declared that it wanted to sell server systems, it was obvious that its biggest and bestest friends would unfriend the company.
IBM (NYSE: IBM) and Sun Microsystems -- now better known as Oracle (Nasdaq: ORCL) America -- have quietly inched away from Cisco. Big Blue struck a deal to sell Brocade switches under its own branding and has strengthened its relationship selling routers and switches by Juniper Networks (Nasdaq: JNPR), for example.
But none of them have pushed off from Cisco as violently as Hewlett-Packard (NYSE: HPQ). The Cisco-HP alliance has expired, but that was just the start. Today, HP happily trumpets out the news that its six major data centers are now completely bereft of Cisco technology, replaced by HP's own networking products.
This announcement does a couple of things:
- Announces that an HP networking solution can replace the traditional Cisco or Juniper architectures.
- Advertises the HP networking portfolio to current Cisco customers.
- Makes it perfectly clear that Cisco is no friend of HP's anymore.
It's a way to get some value out of the 3Com acquisition, but hardly the end of Cisco. 3Com's annual revenue is only around $1.25 billion, about one-third the size of Juniper and a mere speck of dust next to Cisco's $40 billion haul.
Nevertheless, the move is part of a larger trend that Cisco walked into with eyes wide shut. I can appreciate the value of selling end-to-end computing solutions, which is what all of the big players are doing now. But I think the integration value here is easily overshadowed by the damage done to Cisco's long-standing industry partnerships, which used to be the one thing that made the company better than the others.
Can Cisco overcome this fatal error of judgment? I'm not so sure, but feel free to tell me how in the comments below.
