How will Cisco Systems and HP go on serving common customers and providing innovative products when they cannot share proprietary information?
Customers Will Expect Both to Handle Services
Enderle said customers generally expect large services organisations like HP’s and Cisco’s to be able to service everything.
“This puts stress on that organisation, but these problems have been common with IBM Global Services as well when applied to competing server or PC products (back when IBM did PCs),” Enderle said. “So, while not ideal, IBM Global Services was able to step up and still cover their clients.
“I expect HP will be able to as well, but I also expect that the related accounts, if they stay with HP, will drift toward HP products or neutral offerings and away from Cisco over time to avoid this aggravation.”
King said he thinks both companies probably will have to work harder to keep customers satisfied.
“[Customers’ biggest pain point will] probably be sorting through their HP and Cisco SLAs [service-level agreements] to determine just how exposed they are,” King said.
Laliberte had a different point of view about customer issues.
“In the short term, customers potentially may have to work with another vendor,” Laliberte said. “If they purchased everything from HP, they may now be forced to bring on another vendor to procure Cisco products. This might impact volume discount levels, etc.
“Potentially working through support issues may also be a worry, although I doubt this will be a problem. Both of these vendors know they need to take care of their customers. In the long term, this may be a positive for customers, as HP’s challenge to Cisco’s networking dominance will drive innovation, choice and perhaps even better pricing, but they need to execute.”
There is a cost to going into competition with a firm that is also a large reseller and service organisation, which is rarely factored in completely to new product-area decisions, Enderle said.
“This is because the folks doing the analysis are generally paid by the executives who want a ‘yes’ answer. Going into servers will be very costly to Cisco over time; we’ll see if the eventual additional revenue was worth it,” Enderle said.
Canter pointed out that both Cisco and HP have invested significant resources in building their alliance, and that it’s not going to end that quickly.
“A mark of a sophisticated alliance organisation is that they can end an alliance when it no longer makes sense strategically and still have enough relationship and social capital between them so that they can work together in the future and in other ways,” Canter said. “Both companies are well-versed in alliance management, so they have likely thought through how to end the alliance in a mutually beneficial way.”
Finally, King of Pund-IT provided the last word:
“Given the rapid evolution in enterprise IT solution development and the continuing rise in industry-standard technologies, I doubt this will be the only such break-up we’ll see. Too bad. They were such a lovely couple.”