HP Plans to Take Share from Cisco in The Ethernet Switching Market
Cisco: A Look at the Company's Key Strengths and Weaknesses (Part 11 of 15)
Cisco dominates the ethernet switching market
Switching products offer many forms of connectivity to end users, workstations, IP phones, access points, and servers. They also function as aggregators on LANs and WANs. Cisco (CSCO) is the dominant player in the enterprise ethernet switching market, with a share of about 61%, according to a report from IDC. However, the report also mentions that HP (HPQ) is managing to grow its ethernet switching business at a faster rate than Cisco.
As the chart below shows, Cisco managed to grow its ethernet switching business at a year-over-year growth rate of 3.8% in 4Q14. HP managed a growth rate of 6.3%, while Juniper Networks (JNPR) experienced a year-over-year decline of 8.3%. Alcatel-Lucent (ALU) is a smaller player in this market.
HP is looking to partner with white-box manufacturers
In the previous part of this series, we discussed how the increasing trend of companies purchasing server systems from white-box manufacturers threatens Cisco. However, HP is trying to leverage this trend by partnering with white-box manufacturers. HP has partnered with the Taiwanese Accton Technology and Cumulus Networks in order to sell HP-branded white-box switches. Accton develops open networking switches, while Cumulus develops a Linux networking operating system.
This isn’t the first time HP has undertaken such a partnership. Last year, it partnered with Foxconn Technology to provide white-box servers for data centers. Clearly, HP is undertaking these partnerships to leverage the growth prospects of white-box manufacturers. We’re seeing early signs of the success of these partnerships as HP’s switching business grows faster, as the chart above shows.
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