2010: The War of IT has Begun; Cisco delivers blow to HP

In school, we are taught important dates or periods within history.  I’ll never forget a history professor asking, “who fired the first shot?” in the American Revolution or detailing the sinking of the Lusitania by the Germans.   Within the history of high technology, yesterday’s announcement by Keith Goodwin, Vice President Cisco’s Worldwide Partner Organization, is such a date.  With one statement, Cisco changed the IT landscape as they ended a lucrative and important relationship with HP by failing to renew HP’s System Integrator Contract that strips HP of being a Cisco Certified Partner and Reseller.

Effectively, HP is now on the outside looking-in at Cisco’s Empire.  HP loses access to Cisco’s proprietary information including product roadmaps and reseller initiatives.  Additionally, Cisco no longer offers HP “protection” as they begin to untangle their complicated business relationships including software and hardware sales.  While HP may believe they are prepared for this action, competing against Cisco head-to-head is very different from maintaining a competition/cooperation arrangement; yet HP is very different from past competitors.

With HP’s size and market power, are we poised to answer the question, “What would happen if an unstoppable force strikes an immoveable object?”  HP has amassed a powerful software and hardware portfolio via acquisition and partnerships.  Also, HP has something Cisco needs, a large, growing, and competent services division (EDS).

Of course, Cisco counter’s EDS with their relationship with IBM but how long will that last?  After-all, IBM is in a similar position as HP with one intriguing difference; IBM is not a network equipment manufacturer (yet).  Can Chambers convince Palmisano to maintain the status quo?  Or do they look beyond partnerships to acquire Juniper, Brocade, or perhaps ZTE to fill their product holes.  Would Palmisano stand for Cisco acquiring a services company?  Or, would that be the final straw that opens a new flank in the war against Cisco.  What would happen if Cisco purchased Liquid Computing or the new SGI?

Finally, let’s not forget Larry Ellison and Michael Dell.  Oracle didn’t just spend billions of dollars on SUN to sit on the sidelines.  Oracle now sports an impressive list of hardware and software assets especially in the realms of file systems and virtualization.  Meanwhile, Dell has opened up their pocketbook and has entered into the services business while radically expanding their relationship with Juniper.

Look for three things to happen:

  1. Heightened M&A Activity (large and small)
  2. Heightened Partnership Activity and Alliances
  3. The rise of an unexpected and/or new competitor

We are watching history in the making as its; Chambers vs. Hurd vs. Palmisano vs. Ellison vs. Dell vs. Klayko vs. Jonhson vs. ?

2010: The War of IT


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