HP Launches Cisco Trade-In Program – A Disruptive Offensive?
Hewlett-Packard has taken aggressive action to counter rival Cisco Systems by launching a “Catalyst for Change” trade-in promotion for U.S. customers. Essentially, the program allows customers to swap out their end-of-life Cisco equipment for shiny new HP equipment — some at 20 percent off the list price. HP estimates that $9 billion worth of installed Cisco equipment is dead or dying, making 2011 the perfect time to “upgrade” to more “open standards.” But is HP’s trade-in program more harmful than helpful to the channel?
In its release announcing the promotion, HP brands Cisco’s equipment as “complex, proprietary and expensive” compared to HP’s “simple, open standards-based” offerings that come with an alleged 66 percent savings in TCO. Not afraid to put its money where its mouth is, HP is also providing an upfront discount of 20 percent on its A-Series and E-Series switches with a trade-in of qualified Cisco equipment such as Catalyst 2960/S series, 3560/E Series/X Series, 3750/E Series/X Series, 4500 E Series, 4900 Series, 6500 Series, and Nexus 5000 Series or 7000 Series switches.
HP thinks there’s a good chunk of customers who were holding off upgrading networking infrastructure due to economical reasons, and now pent-up demand is going to pop. What’s more, HP is looking to take the ‘sting’ out of transitioning by offering interoperability with Cisco and other legacy networking equipment, on top of migration services and expert training. The program is available now through HP Account Managers and HP Enterprise Authorized Resellers. (I’ve checked in about regular resellers and VARs with our HP contact and will report back.)
But here’s a question worth asking: Does HP’s trade-in program provide a disturbance in the force of the channel? While Cisco’s size leaves it immune to name-calling and combative during competitive tactics, I can’t help but wonder if HP’s constant berating of Cisco’s equipment leaves a mark on Cisco enterprise resellers who may be providing equipment that — though complex or expensive– is the right tool the for the job.
Conversely, HPs’ competitive tactics could have an effect on (relatively) smaller companies and resellers, like those working with ADTRAN. At its Connect 2010 event for partners and analysts in early December, ADTRAN frequently referenced Cisco converts who enjoyed the value-per-cost of ADTRAN equipment. But ADTRAN’s trade in program could likely suffer a hit when HP throws its muscle around.
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I like the concept of the HP trade-in program, but they are contradicting themselves. First they state:
“HP estimates that nearly $9 billion in Cisco networking equipment is approaching end of life or service in 2011.”
Then they state that the trade-in program ONLY applies to newer Cisco equipment:
“Cisco Catalyst 2960/S Series, 3560/E Series/X Series, 3750/E Series/X Series, 4500 E Series, 4900 Series or 6500 Series, as well as Cisco Nexus 5000 Series or 7000 Series switches.”
All of these models will not be EOL in 2011. In fact, Cisco has not even announced EOS (end of sale) for those models, which means the actual EOL will be over 5+ years away!
HP should include older Cisco equipment in their trade-in program if they want to make sense to customers.
Cheers!
Tristan
Hi Tristan,
I think maybe it wasn’t clear, but those are the items that will give you 20% off HP equipment. That’s probably why, since they’re newer. Other Cisco items most likely can be traded in for a lower percentage.
Thanks for helping us clear that up!
Best,
-Dave
Dave,
Not sure I understood the comment “I can’t help but wonder if HP’s constant berating of Cisco’s equipment leaves a mark on Cisco enterprise resellers who may be providing equipment that — though complex or expensive– is the right tool the for the job.” Is this not the very nature of competition? It is consistent with Cisco’s approach to their competitors to pound the Cisco message of superiority, just as with other vendors in other markets. A key role of the channel is to be the “trusted advisor” that helps a customer sort through sometimes conflicting messages from manufacturers and make the best decision for a solution.
Thanks,
Daniel
Dan: The VAR Guy thanks you for your perspectives. Are you a Cisco partner? HP partner? Both? Neither? Tell The VAR Guy more (and thanks for the dialog).
-TVG
Hi Dan,
You’re right. It’s the nature of competition. I’m merely asking a question if it does indeed have an effect on Cisco resellers. That’s all.
Best,
-Dave
We are seeing a lot of small to midsized customers interested in obtaining some liquidity on their used Cisco equipment when it comes time to upgrade.
It’s an effective way to offset a nice chunk of the upgrade cost of going from, for example, standard 10/100 to Gigabit ethernet to the desktop.