HP CEO Mark Hurd: Never Enough
By Damon Poeter, ChannelWeb
April 23, 2010
Page 4 of 5
The Battle For The Data Center
The general public may be blissfully unaware of it, but there is a battle brewing behind the scenes, deep in the heart of the data center back end that makes it possible for them to have things like e-mail and online banking. It's a battle whose outcome could have great consequence for the technology industry as a whole.

This is Mark Hurd's territory.

In recent years, perhaps accelerated by the recession, a series of consolidating moves by giant IT companies has made it possible for a handful of vendors to begin offering nearly complete end-to-end data center solutions. This small stable of highly consolidated players now includes IBM (NYSE:IBM), Dell (NSDQ:Dell), Oracle (NSDQ:ORCL) following its Sun acquisition, Cisco (NSDQ:CSCO) and, of course, HP (NYSE:HPQ).

Of those companies, HP and Cisco have made the boldest moves toward making a play for the entirety of the data center's fabric--computer servers, storage and networking. HP calls its end-to-end architecture for the data center Converged Infrastructure and Cisco calls its platform Unified Computing.

HP recently completed its acquisition of networking hardware manufacturer 3Com to bolster its existing ProCurve networking portfolio. Cisco, the dominant player in networking, last year launched its own line of servers for the first time and has allied itself with EMC and VMware.

The moves have vaulted the growing HP-Cisco feud into the spotlight. So far, Cisco has done most of the public saber-rattling--allowing HP's system integrator partner status to expire and cutting off HP's access to the Cisco product road map.

Hurd stays artfully above the fray even as he makes it clear that the 3Com (NSDQ:COMS) acquisition places longtime networking market-share leader Cisco squarely in HP's sights.

"We've had a very successful run with ProCurve," Hurd said, speaking a few weeks before the 3Com deal is closed. "We've gained a material amount of share, both in ports and in revenue. We have announced our intent to acquire 3Com, which we think is a set of capabilities, end-to-end, that is going to be very impressive.

"It's a market with good growth in it--very high gross margins, which is the history of the prices that the current incumbents in the market charge. And we'll be very active in the market, so we're pretty excited about it."

The "current incumbents in the market" is as close as Hurd will come to identifying Cisco as a target. He downplays concerns that HP partners are being leaned on too heavily to dump Cisco in favor of ProCurve.

David Donatelli, general manager of HP's ESSN unit, reiterated that message during an April 19 press conference discussing the 3Com integration, saying that "there will be no pressure exerted" on HP partners to pick sides, "other than us offering great products".

"I don't think our view is that the world has to be exclusive," Hurd said. "We're very comfortable in a co-opetive environment and have been for a very long time. I think that's one of the assets of dealing with HP. We're used to partnering in all kinds of different environments to the optimal conclusion for a customer.

"Because at the end of the day, we've got to do things that help customers."

Nevertheless, partners of the two IT giants are starting to pick sides.

"We have recently made a strategic decision to go to market with HP networking and not Cisco," said Sarazin.

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