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Cisco claims new HP/Microsoft alliance will lead to direct selling

While Cisco sees channel conflict in HP and Microsoft's unified communications alliance, the two vendors insist their channel commitment remains rock-solid

BOSTON – HP (NYSE: HPQ) and Microsoft (NASDAQ: MSFT) want to take their unified communications business direct and away from the channel. That is what Don Proctor, senior vice-president of the voice technology group at Cisco Systems (NASDAQ: CSCO) said during his keynote address Wednesday morning at Cisco’s Partner Summit.

The comment was made during a speech that focused on collaboration and unified communications. Proctor didn’t follow up the comment with any reasons or theories to support the claim.

Last week, Microsoft and HP forged an alliance and promised to spend US$180 million over the next four years to deliver end-to-end solutions combining Microsoft’s Office Communications Server, Exchange and SharePoint portal software with HP’s smartphones, servers, storage and switches.

Rob Lloyd, the head of worldwide sales for Cisco, backed up his co-worker by saying HP’s approach towards collaboration will be direct, in his opinion.

“Microsoft was saying for a year that the network didn’t matter and now they have a partnership with a networking provider. They picked the wrong partner. I found it interesting that Microsoft has found the network, but the HP alliance will lead to little value for unified communications for Microsoft. The same way as it did through the Nortel partnership or with Siemens. We think we are the best company in networking. We shall see how it goes and I’ve talked to the channel and they are pleased with the level of innovation we have and they are loyal to Cisco,” Lloyd said.

Dave Frederickson, vice-president, enterprise storage and servers (ESS) group at HP Canada, and is former channel chief in Canada, denied the allegation, saying that the new alliance with Microsoft will lead to expanded channel programs.

“The Frontline Partnership (which has been in place for many years) has a program for channel partners today – known as The Frontline Partner Program. This new initiative of the Frontline Partnership will expand on the business opportunities for those channel partners and provide them with new solutions to offer their customers in areas they have not previously delivered. As future products are created through our joint roadmap, HP and Microsoft intend to expand channel focused programs specifically to support the unified communications and collaboration portfolio of products and solutions,” Frederickson said.

A spokesperson for Microsoft Canada also re-affirmed the software giant’s channel commitment, insisting the vendor’s channel partners are “an important and large component” of the initiative with HP, and will play a significant role.

The HP and Microsoft go-to-market strategy has consistently been a mix of ‘direct’ and ‘indirect’ efforts. Each company has an exceptional set of partners, and depends on those partners to deliver solutions worldwide, to enterprise, mid-market and SMB customers,” said Bryan Rusche, unified communications and collaboration product manager, Microsoft Canada. :HP and Microsoft have over 30,000 joint partners worldwide, known as the Frontline Partners. The great majority of these partners are also HP ProCurve channel partners. So, we already have partners that are selling solutions from both companies; this initiative will further enhance our existing programs by enabling partners to offer the end-to-end UC&C solution announced recently.”

Cisco CEO John Chambers had a more diplomatic response than his colleagues, saying the company does not focus on competition. “When we enter a market we like to be either in the No. 1 or No. 2 position. The take away from this is that we partner with Microsoft in 89 areas and we compete in only two. We do compete with HP and we have never had to compete against a $110 billion competitor before. We will hold our own.”

James Alexander, vice-president and market analyst for London, Ont.-based Info-Tech Research Group, disagreed with Proctor that HP and Microsoft through its Unified Communications alliance would take business direct. “The battle lines are clearly drawn,” Alexander said.

The rivalry between HP and Cisco became more intense in mid-March when Cisco announced Unified Computing System, its next generation platform that unites computing, networking and storage access along with virtualization resources into one system for the data centre.

During that announcement, Cisco introduces partnerships with Accenture, BMC, EMC, Intel, Microsoft, Red Hat and VMware, but not HP, who was one of Cisco’s top integration partners in Canada.

Cisco channel chief Keith Goodwin, wrote in a late May blog entry that he wasn’t sure what role channel partners would have in the HP/Microsoft alliance. Citing the press release, Goodwin said that HP would handle most deployments and professional services for the Microsoft alliance.