Wed, Jan 28, 2009 - Page 6 News List

Hewlett-Packard offers lower prices to challenge Cisco

BLOOMBERG

Hewlett-Packard Co is trying to undercut larger rival Cisco Systems Inc in the market for business networking equipment by pricing its products at 30 percent to 50 percent less.

Hewlett-Packard’s ProCurve business unit unveiled networking switches and management software during an event on Monday at the company’s Palo Alto, California, headquarters. The products help direct network traffic in corporate data centers.

Chief executive officer Mark Hurd expanded Hewlett-Packard’s efforts to sell networking products last year after the company entered the market 25 years ago. He tapped Marius Haas, who had helped oversee acquisitions, to run the unit. In November, Hewlett-Packard’s sales staff were given quotas to sell ProCurve products for the first time, Haas said.

“This is a US$19 billion addressable market for us, and today we cover only 25 percent in what we consider a high-growth, high-margin business,” Haas said in an interview on Monday.

He declined to give sales goals or profit margins for ProCurve.

“The economy is dictating that every organization needs to look at every dollar spent. We have a lower total cost of ownership,” he said.

ProCurve products cost less than rival offerings from Cisco when taking into account the price for the networking hardware, software, service and support, Haas said. Those savings can be as much as 50 percent, he said.

“Cisco and HP have a long-standing strategic alliance and work closely together in many areas of our business, including the data center,” San Jose, California-based Cisco said in an e-mailed statement. “Cisco offers the broadest set of integrated intelligent services in the industry today.”

Hewlett-Packard also announced new partnerships with software makers including Microsoft Corp, McAfee Inc, and F5 Networks Inc, whose programs work with ProCurve.

Hewlett-Packard, the world’s largest maker of personal-computers and printer, fell US$0.22 to close at US$35.57 in New York Stock Exchange composite trading on Monday. The shares dropped 28 percent last year.

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