We’ve all heard of Black Monday, when the world’s stock markets collapsed. Wikipedia sums it up nicely here. If you were HP and your biggest reseller moved all of its data centres to Cisco, would that urge you to update the company diaries to read ‘Terrible Thursday’? KitGuru investigates.
It was a grim day for Microsoft executives when they read The Inquirer and learned that Intel, its closest hardware partner, was going to skip an entire generation of desktop operating system upgrades because it could not see the benefit. Ouch!
Remember when news broke that Ford’s new CEO prefers to spend his money on Lexus saloons ? Another big Ouch!
Computercenter is a monster. By any standards. It’s the biggest independent supplier for IT into Europe and its 10,000 employees – stretched from the south of South Africa to the north of Norway – pull in almost $4 Billion in revenue each year. Nice.
Computercenter moves A LOT of HP gear. It is a hub-with-benefits for the world’s biggest computer manufacturers.
Internally, of course, Computercenter can have any datacentre it wants. It is a complete expert – trusted by governments and business leaders alike – with over 30 years experience.
So when Computercenter, HP’s leading customer for Blade technology, decides to upgrade all of its data centres – whose blade technology does it seem to have choosen?
That’s right, Cisco. Stunning.
If this information is 100% correct then, from where KitGuru’s sitting, what a coup that would be for Cisco and what a hammer blow for HP.
Right now, we can’t be certain that the core unit of choice will be the Cisco UCS B200 M2 Blade Server, but we have a link to the product here just in case.
Until the final deal is (or isn’t) announced, we can’t be certain of the exact details. Given the potentially catastrophic long term damage this move could do to HP’s blade business, we’d expect a statement from Mark Hurd, HP’s CEO, Chairman and President – most likely spinning it as a ‘one off and nothing to be worried about’ if you are an HP share holder. Oh. Hold on. Mark’s not around any more, is he?
Cathie Lesjak, Todd Bradley or Ann Livermore could be candidates for the “Whoops, sorry we lost Computercenter” statement – but maybe Ann will be further back in the bidding, given that is’s her Enterprise Division that’s suffered the loss. To be honest, we tried to help by checking out HP’s search criteria for a CEO, but the Human Resources department does not seem to have got round to posting the job yet.
We wonder if anyone at HP HQ is hoping that Carly Fiorina will fail in her political ambitions – perhaps opening the door for a return to the HP helm.
KitGuru regulars will, by now, be asking themselves (a) How big is the global blade market, (b) what was HP’s share before Cisco started to pooh on its picnic and (c) how much of a long term blow could this be to HP ?
The wonderfully names Jed Scaramella, top man in IDC’s Data Centre and Enterprise research team, said recently “Blades remained a bright spot in the server vendors’ portfolios. They were able to grow blade revenue throughout 2008/9 while maintaining their average selling prices. Customers recognize the benefits extend beyond consolidation and density, and are leveraging the platform to deliver a dynamic IT environment. Vendors consider blades strategic to their business due to the strong loyalty customers develop for their blade vendor as well as the higher level of pull-through revenue associated with blades.”
Once more, “…strong loyalty customers develop for their blade vendor…”. Hmmm.
Until this stunning announcement that Computercenter will cut HP out using Cisco blades, Jed Scaramella was quite certain that the market was bright for HP. In fact, he has only just finished penning a report on how HP’s Blades will drive convergence. Convergence certainly seems to be on the table, but Cisco looks to be doing the driving.
Overall, HP has a global turnover in the region of $90Bn, which is over 3 times more than Cisco. However, ALL of Cisco’s revenues are derived from the hardcore data market, while HP does big business across a range of products – including printers and ink.
IDC has indicated that the blade market could soon touch $8Bn a year.
According to IDC, HP had almost 53% of the blade market last year. Wonder what it will be by 2012?
On the same charts, Cisco wasn’t even listed as a player.
What do the markets think?
Well, Cisco has traded from (roughly) $21 to $28 over the past 12 months and is presently at the bottom end of that scale – at just over $22. Will that price rise on the back of this news? No idea – don’t listen to us – we don’t do investment advice – but we find it all fascinating!
HP has traded as high as $55, but is now just over $40.
There’s an old saying in the publishing industry, that the most important magazines and web sites influence the influencers.
If Computercenter moves from HP to Cisco and influences customers from Oslo to Johannesburg to do the same, what kind of blow might that represent for besieged HP?
We have asked Cisco for a formal reply on this amazing report. We’ll let you know if it decides to comment on its apparent good fortune.
KitGuru says: Would you want to be an operating system company, in the same market as Microsoft? Nope. Neither would we. HP has been a great name for consumer electronics for many years, but the strongest business brand in its portfolio, Compaq, has been moved from high-end server applications to cheap and nasty notebooks. Cisco, meanwhile, is all about the serious, it’s all about the strategic and it’s very definitely all about the corporate backbone. We would not want to be a system assembler like HP, up against a hardcore networking giant like Cisco, in the business arena. Not without a CEO on board.
Light traffic below, heavy packets in the KitGuru forum. As ever, we stand to be corrected. If anyone from HP or Cisco’s board wants to contact us with adjustments, then we’re all ears.