The New York Times has an interesting article about the rise of ProCurve, Hewlett Packard’s networking division. Gartner analyst Mark Fabbi told the Times that Procurve’s revenue has grown by 40% over the last two quarters, putting some pressure on Cisco’s status as the undisputed market leader.
The story explains that HP’s change in leadership from Carly Fiorina to CEO Mark Hurd has had a major impact on the company’s networking business. Fiorina maintained a close partnership with Cisco, in which HP sold computers and printers and Cisco sold networking gear to the same customers. Fiorina even offered incentives to HP sales reps who sold Cisco equipment without offering similar rewards for selling ProCurve gear. Hurd has reversed this policy, encouraging HP to focus on sales of ProCurve technology.
The company has also built up its ProCurve division this year through acquisition. This summer HP acquired Colubris, a maker of wireless LAN technology known for high quality products that are favored by manufacturers, hotels and other vertical industries that require reliable, large-scale wireless networks. Colubris also gave ProCurve instant credibility with 802.11n, the next generation of wireless LAN technology.
While HP builds up its networking business and threatens to be a serious competitor in the industry, Cisco has its eyes on a much bigger threat: the recession. Cisco has announced plans to shed $1 billion in expenses in order to keep its margins healthy during the downturn. Citing UBS Research, GigaOm has reported that Cisco will shut down operations for four days at the end of this year to save money. This follows other reports that Cisco has canceled its annual sales conference in San Francisco.