HP Comes on Strong: Cisco Better Watch it!

HP (NYSE: HPQ) has made it clear; its sights are set on dominating the datacenter.  Cisco better watch it!  Addressing partners in the XChange spotlight, Adrian Jones was clear about HP's goals and the channel's role in meeting them.

"We have 19 product categories at HP and we lead in 14 of those. We want to lead in all 19, but we cannot do that without the channel," Jones said.

HP is determined to go after Cisco's market share, and the latest channel investments show it means business.  So, HP is doubling down on its channel investment; it spent $550 Million in MDF for PartnerOne partners. The incentives have been even richer for the Procurve networking product line; those who win over competitive accounts will enjoy tripple the benefits.  Bravo, HP, for aligning product portfolio strategy with channel incentives!  Obviously this move is meant to strike at the heart of Cisco's market. 

What's the channel's reaction? One HP reseller has commented:

"As an HP partner business has been tough this last year primarily due to the economy and pressures the vendors are under to reduce costs. To HP's credit they have indeed stepped up to help many partners with MDF and IBF funding. They deserve credit for truly investing in partners while many companies have pulled back in their support of the channel."

Not to be outdone, Cisco's (NasdaqGS:CSCO) Surinder Brar recently reminded partners on the Cisco blog that the company has paid out significant VIP incentives over the last six and a half years and has incorporated additional technologies to the VIP program. The VIP incentives are estimated to generate between one third and one half of partner profits.  And Cisco is simplifying the customer satisfaction requirement so that partners will go through the process only once for all technologies.

Clearly the battle over market share has escalated the battle over channel mindshare and leverage.  Partners who sell both Cisco and HP products have the opportunity to reap rich rewards.

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