ProCurve: Networking is not about cost

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Colin Barker ZDNet.co.uk

Published: 15 Feb 2008 15:56 GMT

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In a market dominated by Cisco, can other networking companies hope to get noticed? ProCurve, the networking arm of industry giant HP, thinks it can.

The company's chief executive John McHugh says that since he took charge of the company 10 years ago, ProCurve is now the stand-out competitor to Cisco across the whole range of networking equipment. Its market share may still be small in comparison, but McHugh argues that his company aims to beat the networking stalwart and any other contenders on performance, features, value and indeed any other area.

ProCurve is one of the first companies in the market to introduce a lifetime warranty for its products and comprehensive road-maps on where the company will be in five years' time: McHugh appears to be living up to his word.

However, Cisco is not the only company to beat. New competition in the shape of Juniper Networks is emerging, and the company has to stay on top of its game. And it's not just technology investors who should care how the company is performing: networking equipment is expensive and has a relatively long shelf-life, so customers need reassurance that the company has a healthy future

Q: You have new competition in Juniper Networks. How do you deal with that?
A: Well, ProCurve has to be the road map that Juniper is following. When you look at our road map to see where we got from 10 years ago to rise to number-two, they have to be looking at that. What we have been able to do over that time is singularly unique. We have seen such success and virtually everybody else has lost market share.

The challenge they are going to face is that this is a very difficult market to be in. Unfortunately, it is underestimated by most people. The people who come from the carrier space tend not to get the way enterprise networking works. They tend to be dismissive about enterprise applications and deployment. You really have to get inside the head of the enterprise customer, and this is not about selling a few switches. It takes a lot of persistence and years and years of commitment, stability and focus.

My initial take on it [Juniper] was: "I don't know the market needs another supplier of a complex, proprietary, single vendor, end-to-end solutions at a relatively high price." We will see how things play out, but I think we already have one of those [Cisco] and I don't think customers are looking for another one.

Meanwhile, you have been building up market share against Cisco, correct?
2007 was a spectacular year for ProCurve. We have had a continuous history of growing 20 to 25 percent in revenue year over year. Last year we grew faster than 30 percent worldwide including EMEA where our market share is the strongest and our revenue size is the greatest. That, of course, is pretty amazing for a business unit the size of ProCurve, in the networking space, to be able to put 30 percent on top of that.

We ended up with an annual revenue of about $750m (£350m) worldwide. You will see that the analysts put us at number-two, beside the market leader [Cisco] in the switching equipment category. We are planning for a similar kind of performance going forward. In revenue size and market share that meant we grew at about twice the market.

Our business case is to outgrow the market and in Europe we are approaching 10 percent revenue, market-share growth. In the worldwide picture it is more like five percent. It's small, but those numbers tend to get bigger and bigger as you close in on a billion dollars run rate.

Where is the growth coming from?
A lot of the growth is in the solutions area. Over this past year we kind of painted this picture of this Adaptive Network vision of security, mobility and convergence and all of it unified under our Adaptive Edge architecture. This intelligent edge vision that we had...

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