HP And Cisco Bury The Hatchet To Accommodate Customers – Everyone Wins?

In a surprising move, HP and Cisco announced that HP will be reselling a custom-developed Cisco Nexus switch, the “Cisco Nexus B22 Fabric Extender for HP,” commonly called a FEX in Cisco speak. What is surprising about this is that the FEX is a key component of Cisco’s Nexus switch technology as well as an integral component of Cisco’s UCS server product, the introduction of which has pitted the two companies in direct and bitter competition in the heart of HP’s previously sacrosanct server segment. Combined with HP’s increasing focus on networking, the companies have not been the best of buds for the past couple of years. Accordingly, this announcement really makes us sit up and take notice.

So what drove this seeming rapprochement? The coined word “coopetition” lacks the flavor of the German “Realpolitik,” but the essence is the same – both sides profit from accommodating a real demand from customers for Cisco network technology in HP BladeSystem servers. And like the best of deals, both sides walk away thinking that they got the best of the other. HP answers the demands of what is probably a sizable fraction of their customer base for better interoperability with Cisco Nexus-based networks, and in doing so expects to head off customer defections to Cisco UCS servers. Cisco gets both money (the B22 starts at around $10,000 per module and most HP BladeSystem customers who use it will probably buy at least two per enclosure, so making a rough guess at OEM pricing, Cisco is going to make as much as $8,000 to $10,000 per chassis from HP BladeSystems that use the B22) from the sale of the Cisco-branded modules as well as exposure of Cisco technology to HP customers, with the hope that they will consider UCS for future requirements.

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Cisco and Citrix: Enhancing the Value of Desktop Virtualization

Cisco announced today a five-year strategic alliance with Citrix in the desktop virtualization space.  As a first outcome of their new alliance, Cisco WAAS will be optimized for Citrix XenDesktop.  It’s designed to improve the end-user experience such that it has “LAN-like” performance.  This translates into the capability of a more rich Unified Communication experience—HD quality video, faster print jobs, and improved app performance.  Rather than buying several products to get this done, this is nicely packaged as one solution for virtual and physical desktops.

What does this mean for Sourcing and Vendor Management (SVM) professionals and what can you do? 

1.       If your organization isn’t looking at this, it will be forced to within your next refresh cycle.  While Desktop Virtualization has been around for years, it’s more recently been attracting enterprise customers at a very robust growth rate.  Most resellers I’ve spoken to enjoy double digit semi-annual growth rates as high as 40% in inquiries and many of them include desktop virtualization on tablets.  At this stage, most companies are still in education mode, but adoption appears to be steadily increasing.  If you’re not working on it right now, spend the time to get educated on the various flavors and the elements of the project that lead to savings for your organization.  ROI will vary from company to company due to the varying desktop environments.

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