Interop: HP sees no China-related threat to U.S. business

LAS VEGAS -- HP's immersion into China stemming from the purchase of 3Com does not present challenges as far as landing enterprise accounts in North America, specifically with large governmental institutions, according to the company's networking chief.

There is speculation that 3Com's strong ties to China, a key attraction for HP's $2.7 billion acquisition, might make U.S. and Canadian governments skittish about doing business with HP due to security concerns. Google and other American technology companies recently accused the Chinese government of interfering with their business in the country, and took steps to avoid the alleged intrusions.

Indeed, concerns about Chinese influence and potential security compromises helped scuttle a previous deal for 3Com, from Bain Capital and Huawei. But HP's newly acquired beefed-up presence in China with 3Com accounts and research labs will not scare off any non-Chinese governmental business, according to Marius Haas, senior vice president and worldwide general manager for HP Networking.

"We've got to go through the same certification process as anyone else," Haas said in an interview at the Interop conference  this week. "Other competitors are moving into China for manufacturing and other things. It is something that is very common. We've got a whole source code audit on everything we've inherited. It all came back much better than anyone ever anticipated. So we're extremely excited about knowing what's in, what's out, and how it's going to be positioned for the U.S. market."

Haas says HP is already gaining "big accounts" in the United States and internationally based on the 3Com portfolio it obtained. 3Com fills out HP's large enterprise core and data center switching, routing and security lineup.

Haas said HP landed a large, "very prominent" account that he would not identify, but that HP will announce soon. The win was based not only on the HP/3Com technology, but product lead-time issues impacting Cisco.

"Within three weeks, the deal was done," Haas said. "And it's very, very large. They tested the technology and then said '(Cisco's) quoting a lead time out to September, and we're not going to do that.'"

Haas said this deal is one of many HP is landing due to Cisco's product lead-time issues. Analysts, however, say the situation is not affecting Cisco financially and may soon be getting better.

HP is also benefiting from the age of some of Cisco's switches as well, Haas said. Cisco's Catalyst 6500 is at least 10 years old but a cash cow for the company with a multi-billion-dollar installed base.

Yet some data center accounts are balking at migrating to the new Nexus platform and are reluctant to adopt Cisco's Unified Computing System (UCS) server/networking/storage access platform, which they view as a potential lock-in, Haas said.

"They've got a $9 billion installed base that they're forcing an end-of-life upgrade on," Haas said. "The upgrade is not as easy as they would like to communicate to the customer. Users are coming to us and saying 'Cisco's forcing us to make an upgrade to a Nexus or a UCS-based architecture model, I don't want to get locked into this new architecture that will force me again to change -- can you come in and provide an alternative solution?' It's creating a huge opportunity for us because Cisco's forcing this migration to take place."

Cisco says it is not retiring the Catalyst 6500.

"That's not true at all," a company spokesperson said. "We are not end–of-lifing the Catalyst line; we have 35,000 customers. We continue to innovate and sell it, and lots of customers have both the Catalyst 6500 and Nexus switches in their data centers."

Cisco says it has at least 400 customers for UCS since its launch a year ago, and that second quarter orders doubled those in the first quarter. Analysts say channel partners note accelerating momentum for the platform -- investment firm UBS states in a bulletin this week that UCS has 300 deployments and another 300 trials, but less than $100 million in revenue.

Cisco expects the Nexus 7000 to be a billion-dollar business this year -- two years after its introduction. Revenue for the switch grew 140% year-over-year in Q2.

HP will hit back later this year with extensions to its Flex Fabric and Virtual Connect data center strategies and technologies. Some will include FibreChannel-over-Ethernet switches HP currently has in its development labs, Haas said.

Flex Fabric is designed to provide a flat, low-latency/high-bandwidth Layer 2 cloud architecture that can converge and provision server, storage and networking services and resources on the fly. From a management perspective, users will have a holisitic view into the converged architecture, Haas said.

Read more about lans and wans in Network World's LANs & WANs section.

This story, "Interop: HP sees no China-related threat to U.S. business" was originally published by Network World.

Copyright © 2010 IDG Communications, Inc.

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