HP Launches Cisco Trade-In Program - A Disruptive Offensive?

Hewlett-Packard has taken aggressive action to counter rival Cisco Systems by launching a “Catalyst for Change” trade-in promotion for U.S. customers. Essentially, the program allows customers to swap out their end-of-life Cisco equipment for shiny new HP equipment — some at 20 percent off the list price. HP estimates that $9 billion worth of installed Cisco equipment is dead or dying, making 2011 the perfect time to “upgrade” to more “open standards.” But is HP’s trade-in program more harmful than helpful to the channel?

In its release announcing the promotion, HP brands Cisco’s equipment as “complex, proprietary and expensive” compared to HP’s “simple, open standards-based” offerings that come with an alleged 66 percent savings in TCO. Not afraid to put its money where its mouth is, HP is also providing an upfront discount of 20 percent on its A-Series and E-Series switches with a trade-in of qualified Cisco equipment such as Catalyst 2960/S series, 3560/E Series/X Series, 3750/E Series/X Series, 4500 E Series, 4900 Series, 6500 Series, and Nexus 5000 Series or 7000 Series switches.

HP thinks there’s a good chunk of customers who were holding off upgrading networking infrastructure due to economical reasons, and now pent-up demand is going to pop. What’s more, HP is looking to take the ‘sting’ out of transitioning by offering interoperability with Cisco and other legacy networking equipment, on top of migration services and expert training. The program is available now through HP Account Managers and HP Enterprise Authorized Resellers. (I’ve checked in about regular resellers and VARs with our HP contact and will report back.)

But here’s a question worth asking: Does HP’s trade-in program provide a disturbance in the force of the channel? While Cisco’s size leaves it immune to name-calling and combative during competitive tactics, I can’t help but wonder if HP’s constant berating of Cisco’s equipment leaves a mark on Cisco enterprise resellers who may be providing equipment that — though complex or expensive– is the right tool the for the job.

Conversely, HPs’ competitive tactics could have an effect on (relatively) smaller companies and resellers, like those working with ADTRAN. At its Connect 2010 event for partners and analysts in early December, ADTRAN frequently referenced Cisco converts who enjoyed the value-per-cost of ADTRAN equipment. But ADTRAN’s trade in program could likely suffer a hit when HP throws its muscle around.

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