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HP’s Trojan Horse

Our neighbors in Palo Alto have been making a lot of noise about the difference in price between Hewlett-Packard and Cisco networking equipment. They’d like customers to believe they can offer similar capabilities to Cisco but at much lower prices—“Cisco for less,” if you will.

Most folks understand that the first part of that claim isn’t true. They’re not Cisco. To start with, when a company spends just 2% of revenues on R&D (as HP does), it isn’t capable of generating the type of innovation that a company spending 13% can (as Cisco does). We explained how Cisco innovation delivers differentiated capabilities when we debunked the myth of the ‘Good Enough’ network.

But some customers still ask me about the price difference—the “for less” part.  After all, everyone is looking to cut costs, right?

Nowadays, I answer those questions by reminding customers of the story of the Trojan horse. You know the one: The Greeks laid siege to the city of Troy for many years, but suddenly withdrew, leaving behind a giant wooden horse as a gift.

The Trojans, believing the war was over, accepted the peace offering, dragged it into their city, celebrated, and fell asleep. During the night, Greek soldiers clambered out of the horse, set fire to the city, and massacred the citizens of Troy. Ever since, the Trojan horse has been synonymous with the most deceptive of gifts…and that’s where HP comes in.

You see, when HP offers discounted prices, it’s not giving you the whole picture about network total cost of ownership (TCO).

As our new study about the real economics of networking reveals, for many organizations approximately 70% of network TCO is incurred after the initial equipment purchase.

HP’s ‘good enough’ network does comparatively little to help reduce the labor, energy, service, security and bandwidth costs that comprise the largest part of that TCO.

Cisco, on the other hand, tackles those challenges head-on with our Prime management solution, TrustSec security, Medianet rich-media optimization, WAN acceleration and EnergyWise technologies.

In fact, as our new study shows, when bandwidth savings and reduced network management costs (which only Cisco can deliver) are applied to most TCO scenarios, Cisco comes close to parity with HP. That’s right: Cisco costs the same as HP but, with Cisco, customers get all the capabilities of a next-generation network.

When the ability to reduce energy consumption in IP phones and networked computing devices with Cisco EnergyWise is factored in, and coupled with the typically longer refresh cycles of Cisco products, the Cisco network could actually be up to 13% LESS expensive than the HP network.

Yes, that’s right: HP will cost MORE than Cisco.

In other words, they’re not Cisco and they’re not less.

Even in scenarios where basic connectivity is the primary aim (versus business enablement, empowerment and upside), and a ‘good enough’ network is considered sufficient, Cisco’s management technologies still narrow the gap on TCO with HP to a negligible difference. Of course, with a basic Cisco network, customers can always upgrade over time. With an HP network, they’re stuck with, well, barely good enough.

You can learn more about all of these TCO facts and the real “Economics of Networking” during an online TV broadcast that Cisco will air at 9:30 am Pacific Time on Monday, October 10th. Click to register.

In the meantime, be careful of anyone offering you a gift that looks too good to be true. It probably is.

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16 Comments.


  1. Well I agree with Cisco that we must not sacrifice the quality for costs. It is interesting that Cisco spends a substantial portion of their revenue to only research and development so i would expect more innovative products in the pipeline waiting for their launch. By the way i liked your example of Trojans and Greek soldiers which fits suitable in this scenario.

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    • Ross Fowler

      Hi Usman. I’m glad that you liked the analogy. The research and development investment has translated into many unique Cisco innovations that deliver tangible economic value to our customers. The study shows that innovations such as Energywise to reduce power consumption, Clean Air to automate the mitigation of interference in wireless networks or Medianet to deliver a high quality video experience have a direct impact on the costs of operating and maintaining a network over its lifecycle. These architectural-level innovations have become a reality due to the co-ordinated R&D investments that Cisco continues to make within the products that form Cisco’s Borderless Network Architecture. It’s Cisco’s R&D investment in networking that ensures that HP is not “Cisco for less”

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  2. Well,

    What i would say is your right HP is not cisco. Note also, Juniper is not cisco. Level one is not cisco. D-link is not cisco. 3com is not cisco but it is now HP….

    Quality is unmatched at different levels, cisco have just refused to budge on price which makes it easy for guys like HP to come in and attack the market. They use 2% on R&D and maximize the low-cost of geting networking done…

    So i’d suggest cisco review their price model and say to HP and the other switch vendors “GAME ON!!!!”

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    • Ross Fowler

      Thanks for your feedback Anthony. The point of this study was to more clearly understand and to articulate the real economic value of the networking innovations that are unique to Cisco. The study shows that an HP network can be significantly more expensive over its lifecycle than a Cisco network – even if HP’s upfront purchase price is lower. So, in fact, we are saying “GAME ON” and are providing facts to show that HP is not only “not Cisco,” it’s also “not less.”

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  3. 1.Are you afraid you are going to be challenged in court by HP or other companies mentioned in court?
    2.Are you ready to defend all the claims that you are making?
    3.Are you expecting that and surprised that it has not happened?
    4. Will HP attend the conference to defend themselves?

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    • Ross Fowler

      Thank you for your comments and questions. We certainly stand by the statements we’ve made in this context and are eager to have productive discussions with our customers, partners, competitors and anyone else who may have questions about the validity of what we’re saying. While we can’t control the actions of our competitors, we do know that our customers ultimately want and deserve an open dialogue about TCO – and that’s exactly what we intend to have.

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  4. Well, while the company’s switching revenue decreased year-to-year for the second consecutive quarter, Cisco maintained its momentum in strategic growth areas, such as collaboration, wireless and datacenter – all of which grew at least 30% year-to-year. This indicates the company is continuing to execute well in those segments that will form the foundation of its long-term growth prospects.

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  5. And I think I know what HP’s 2% R&D is spent on – Cisco publications!

    But seriously, we all know that there is no real comparison here. McDonalds also claims to be healthy – doesn’t mean it is! Cisco has a long-standing reputation for qualitym not to mention customer support, so it should expect it’s competition to try and take a bite out of their market share by making coparative claims that when examined closely, just don’t measure up. Rock on Cisco!

    Thanks. Have a great day and Happy Thanksgiving to all Canadian readers.

    Sally O’Connor
    http://SweetSpotTraining.com

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  6. I think you need to look at the values again…you’ve looked at one side of the coin. Flip it…for instance smartnet support against lifetime support. Your point is valid, but I work in an EMEA market. You have to appreciate mass outweighs long-term value proposition. cost matters. actually cost, not projected…

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    • Ross Fowler

      Hi Anthony, I’m glad that you raised that point and have given me the opportunity to set the record straight about Cisco’s warranty and support.

      It’s a common myth that Cisco only offers SMARTnet and doesn’t offer lifetime support. In reality, we offer both. For example, in our switching portfolio we offer a Limited Lifetime Warranty (LLW) for our Catalyst 3K, 3K-G, 3K-E, 2960 and 4K products. We offer 5 years on power supplies and fans, and Lifetime on the switch. This is backed by 10 Business Day Advanced Hardware Replacement, with the hardware warranty ending five years after the product reaches end of sale.

      We also offer an Enhanced Limited Lifetime Warranty (E-LLW) for the Catalyst 3K-X and 2K-S, where we add Next Business Day Advanced Hardware Replacement and 90 days TAC support. We also provide unlimited free updates to the latest IOS release within the sames IOS service level, with software support ending three years after our current generation of products reaches end of sale.

      Of course, even though we offer LLW and E-LLW, we do recommend SMARTnet for on-going world class TAC support to reflect the mission-critical nature of most network deployments. No networking competitor can match the support capabilities of Cisco’s TAC, but in the end, it’s the customer’s choice.

      You can access the latest terms and conditions of our warranties at http://www.cisco.com/en/US/products/prod_warranties_listing.html

      I also suggest that you drill in to HP’s warranty terms and I think you’ll find that you don’t get much for free. You’ll need to go to HP Carepacks for more in-depth support – and they’re not free.

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  7. Well Ross, you’re right about HP is not Cisco, most of technical people “including myself” are even familiar with Cisco technology and know its good level of quality,

    However i think Cisco must not ignore the possibility of losing big market share in some basic fields like LAN implementations which normally doesn’t require high technical products and mainly needs legacy configuration & good availability which is “good enough” in HP plus life time support that reduce TCO,

    It’s easy to be on top but hard to keep it for ever, Cisco should expect that next years people will gain more trust in HP considering the world bad economic situation & may think to depend more in HP core level products.

    I believe that if Cisco didn’t consider more attractive discounts in hardware price and reduced the value of OPEX then economic factor may become more effective in the coming years & selection of respected competitors like HP, Huawei would be more acceptable “especially by managerial level”,

    i liked the example of Trojan Horse, but hope that Cisco avoid facing scenario of David & Goliath :)

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    • Ross Fowler

      Thanks Ramy. You raise some interesting points and I appreciate your positive comments around Cisco’s quality.

      We also hear comments like yours about basic connectivity being sufficient for some network implementations, and that’s why Cisco offers economy choices. An example of such an economy offer is our Catalyst 2960 S access switching product with the option of a Limited Lifetime Warranty. Our economy offers provide competitively priced, industry-leading networking performance – without delivering all of Cisco’s Borderless Network Architecture Services.

      That being said, we hear from more and more customers that the mobility, cloud, video, security, IT productivity and green trends are placing enormous demands on the network – demands that can only be met by taking an architectural network approach – with innovations at a product, services, systems and architectural level. That’s why Cisco launched its Borderless Network Architecture over two years ago and why that Architecture is resonating so well with our customers. So while we do offer economy alternatives, we believe that there is enormous value for our customers in an architectural approach to networking. That value has been confirmed in the Economics of Networking study that I shared in the Webcast on October 10.

      So Ramy, we do intend to remain on top by offering a choice for our customers and preparing their networks to meet the demands of mobility, cloud, video, security, IT productivity and green.

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  8. fully agree. I am in networking team for last 5 years and I know that no one can match Cisco.

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  9. The age old truth is the more you pay the better the product, Cisco is the industry leader for a reason, o.k not all products at higher costs are the best but in most cases it is, I have a saying, “buy cheap, buy twice,” and it has proven true on many instances.

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  10. We use Cisco for our networking, we have tried multiple others but none have come close, Cisco hugely reduces our bandwidth, the initial cost may be more but ongoing the cost is far less.

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