Cisco Cutting Off Contract With HP

Posted Feb 19, 2010

Cisco Systems Inc. (NASDAQ:CSCO) is cutting off a system integrator contract with HP. HP will no longer be a Cisco Certified Channel or Global Service Alliance Partner either. Below is the full statement from the Cisco Blog:

Hello, I?m Keith Goodwin, Senior Vice President of Cisco?s Worldwide Partner Organization. I?d like to take a couple of minutes to discuss the changing IT landscape, the evolving role of the network and the implications to our partnering strategy with HP.

As we all know, change is the only constant in the IT industry! As the market transitions to collaboration, virtualization of the data center and cloud-based services, the role of the network continues to grow. In order for Cisco to lead these market transitions with our partners and for our customers we must align with and invest in partners who share our network-centric vision.

For Cisco, partnering is a critical element of our growth and innovation strategy. Consider these statistics:

* About 80 percent of our business flows through our partners;
* We have more than 12,000 Certified Partners, including 650 elite
Gold Certified Partners;
* And, every day, 250,000 partner employees sell and service Cisco technology solutions

To ensure we have a diverse ecosystem of partners that can address the needs of our customers and who are aligned to our vision, we continuously evaluate our partner relationships.

As the role of the network continues to grow it is creating new opportunities for Cisco and our partners, but it is also changing the dynamics of the industry.

Over the last few years our relationship with HP has evolved from a partner to companies with different and conflicting visions of how to deliver value to customers. Despite this shift in industry dynamics, HP had remained a Cisco Certified Channel Partner. Being a Cisco Certified Channel Partner has numerous benefits including access to proprietary information (such as product roadmaps) and partner profitability initiatives. Given the evolution of our relationship it simply no longer makes sense to provide these benefits to HP.

With this in mind we recently notified HP that we will not renew its System Integrator contract when it expires on April 30, 2010, resulting in HP no longer being a Cisco Certified Channel or Global Service Alliance partner.

So, what exactly does this mean and why are we making this change?

We are taking this action to be transparent to both partners and customers?we will compete with HP for future business.

That said our top priority is our customers. Our responsibility as a leader of in the IT industry is to ensure we focus on our customers as our top priority amidst shifting industry dynamics.

As such we have already reached out to HP to begin the discussion around a new agreement that ensures business continuity for existing customers and better reflects the current state of our relationship. We will also honor Cisco customer service contracts with HP for their duration.

Our commitment is clear: we will continue to work with HP wherever our customers expect it and where it makes sense for our business.

Overall, our strategy remains unchanged: we are focused on capturing markets in transition, creating business value for our customers and new opportunities for our partners.