As Hewlett-Packard Co (HP) prepares to split in two, it aims to boost its share of the US$38 billion networking market dominated by Cisco Systems Inc.
The centerpiece of the effort is new software built on HP’s acquisition of Aruba Networks Inc that would let clients manage entire networks with a single app, instead of a patchwork of tools. HP is also revamping its sales staff — merging teams and dangling incentives to make sure clients are pitched on the full range of the company’s technologies.
“There is lots of market share that we can gain,” HP chief executive Meg Whitman, who is to lead HP Enterprise, which has about US$54 billion annual revenue, said in an interview. “We are a No. 2 player. Big difference between us and No. 1 — I think we’ve got a really great portfolio, and we’re heading right to where the market is moving, which is wired and wireless.”
The effort began under Whitman’s predecessor, Mark Hurd, who spent more than US$2 billion on networking vendors, including 3Com.
Even so, HP grew sales in networking by less than 10 percent over four years, with Cisco offering a more complete package of products.
Cisco still commanded 49.7 percent of the global enterprise networking-equipment market last year, while HP had 8.3 percent and Aruba Networks Inc. 1.7 percent, Gartner Inc has reported.
To close the gap, Whitman bought Aruba last month for US$2.5 billion.
Aruba, which makes wireless equipment for large companies, hotels and universities, is to form the backbone of HP Networking, as the new business is to be called.
Former Aruba CEO Dominic Orr is leading the effort. Boosting networking sales is crucial for HP Enterprise, which is to separate from the more consumer-focused HP Inc later this year.
Aruba will be “a Trojan horse to ramp up their networking business,” said Woo Jin Ho, an Bloomberg Intelligence analyst. “It is a way for them to try and get their campus switching business back on front. We are literally in the first innings of a five-year replacement cycle.”
HP Networking had US$2.63 billion in sales in the past fiscal year, just 2.3 percent of total revenue, while Aruba had revenue of US$728.9 million, growing at 30 percent annually on average for the past five years.
That compares with Cisco’s sales of US$24.1 billion across switches, routers and wireless equipment in its most recent fiscal period.
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