Revisiting the HP ProCurve Question

In two articles published on Network World’s website, we’re provided with further insight into why Hewlett-Packard continues to keep its ProCurve networking unit within its corporate family.

That is not to say HP won’t eventually sell ProCurve, perhaps to a private-equity firm such as Francisco Partners, which has been making investments in Internet-security companies — such as WatchGuard, Barracuda, and Blue Coat — and might see a lot of value in obtaining an enterprise-networking company that appears to be on the upswing and could begin chipping away at Cisco’s ridiculously dominant position that market.

In fact, there’s nothing in the Network World piece titled "Why doesn’t HP break off its ProCurve business?" or in an extensive interview with John McHugh, vice president and general manager of ProCurve Networking by HP, that excludes the possibility HP would sell ProCurve if the right offer came along.

McHugh essentially contends that ProCurve is an independent entity that competes according to the networking industry’s "open-market competitive standards." He says HP benefits from ProCurve, and ProCurve benefits from HP, primarily by leveraging the latter’s research-and-development initiatives in areas such as server-based virus throttling.

Still, McHugh readily concedes, HP hasn’t fully embraced ProCurve as a strategic asset. To the contrary, HP’s strategic networking partner in major enterprise accounts is Cisco Systems, not HP’s own ProCurve group.

The party line is that HP is seeing more value in ProCurve now that the company is being recognized by market watchers, such as Dell’Oro and IDC, as the distant runner-up to Cisco in the enterprise-networking space, nudging ahead of rivals such as Nortel Networks, Foundry Networks, Extreme Networks, and 3Com, a vendor that abandoned the enterprise several years back but has returned to it recently after several strategic twists and turns.

It’s true that HP ProCurve seems to have better prospects now than it has had for the last few years. I think that enterprise networking buyers are receptive to Cisco alternatives, concerned about the networking giant’s comparatively high prices, proprietary protocols, and its growing emphasis on pushing applications and related infrastructure along with its networking gear.

As applications converge over IP networks, enterprise IT shops wants to maintain the flexibility and openness of their networks to support existing and emerging applications. As Cisco ties its networking gear to its applications — such as its CallManager IP PBX, its security technologies, and its various conferencing products — it seems to be working against the openness and versatility that IP-based networks promise.

So, perhaps, as the enterprise-networking market heads into a new era, one in which Cisco might be vulnerable to market-share losses, HP ought to keep ProCurve. Then again, maybe HP figures the time is right to sell ProCurve while its perceived value is at an all-time high.

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