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.
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.
Tags: beyond tco, borderless network architecture, Borderless Networks, cisco for less, economics of networking, Energywise, good enough network, medianet, prime network management, ross fowler, tco, total cost of ownership, TrustSec, waas, WAN acceleration