Cisco Systems (Nasdaq: CSCO) opened an unpleasant can of worms when it decided to start selling server systems.
The latest round of backlash from that decision involves Hewlett-Packard's (NYSE: HPQ) hunting down longtime Cisco customers with flaming torches and sharpened pitchforks, chanting the mantra "a catalyst for change." By HP's reckoning, some $9 billion in existing Cisco networking hardware is just about due for replacement, and what better time than a forced upgrade to switch horses to HP's networking gear?
Under the "Catalyst" program, HP offers generous 20% discounts on its high-end A-series and E-series Ethernet switches if you trade in an old Cisco Catalyst or Nexus switch. If that's not enough to make you switch, HP also points out that its networking equipment is proven to work well with other brands, and the company can also sell you installation services and administration training to boot. Nice way to double-dip there, HP.
IBM (NYSE: IBM) and Oracle (Nasdaq: ORCL) have also done some nasty things to Cisco over the past year and a half, like getting closer to Cisco rivals Brocade Communications Systems (Nasdaq: BRCD) and Juniper Networks (NYSE: JNPR), but HP is the Cisco partner acting most like a jilted lover.
This is obviously an effort to squeeze value out of HP's $2.7 billion 3Com buyout. That in turn was always an attempt to fire back at longtime HP partner Cisco for suddenly becoming a direct competitor in the server space. HP has fired many a shot across Cisco's bow since the networking giant announced its Unified Computing servers, but the venom doesn't seem to have disappeared at all.
HP won't snag anything near all $9 billion of incremental upgrade sales from Cisco with this program, but every little contract stolen will be a thorn in Cisco's side courtesy of a former ally. I still think Cisco was stupid to get into the server market, and will lose more than it gains from that silly move.
Add Cisco to your Foolish watchlist to stay on top of its wins and losses in 2011.
