Cisco (CSCO) Customers Switching to HP (HPQ), Juniper (JNPR)
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Rating Summary:
27 Buy, 29 Hold, 1 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Cisco Systems Inc. (NASDAQ: CSCO) has long been the gold-standard of switching systems, but an article from the Wall Street Journal's Cari Tuna on Wednesday points out that the company is seeing increased competition from rivals new and old.
Hewlett-Packard Co. (NYSE: HPQ) has started its assault of Cisco's market dominance by offering competitive products for massive discounts.
According to a source cited one small business customer in the report that has found life without Cisco products to be better on the bottom line. Kevin Gaffer, CEO of Renkim Corp. in Southgate, Michigan, said that he recently purchased switches from HP at a price that "couldn't be passed up."
Gaffer said that the discount saw him receive two switches for $361 each, while the quoted price from Cisco at nearly $5,000. Admittedly the HP switches were far more modest, but for a small business more than optimal.
"We're right there competing in that space" with Cisco, Marius Haas, H-P's senior vice president and general manager for networking, said.
HP's new CEO Leo Apotheker said that the company is winning market share in the switching sector.
While HP's switches business is improving, Cisco reported last month that its business saw a 7 percent drop quarterly revenue. Cisco's switch business accounts for about a third of its annual revenue.
Cisco is also seeing pressure from upstart Juniper Networks (NYSE: JNPR), which has grown its network-switching market share to around 2.3 percent from nothing in 2008. Juniper is planning to unveil a new suite of networking gear on Wednesday.
Forrester Research analyst Robert Whiteley said, "The competition is definitely heating up. As more viable competitors enter the market ... companies are getting a lot more confident in investing in Cisco alternatives."
Cisco CEO John Chambers has stated that the increased competition has nothing to do with price pressure from rivals, adding that the unsustainable discounts don't lead to long term solutions.
Shares of Cisco are trading flat on Wednesday in early market movement are $18.59. HP Shares are down 11 percent to $42.87 after its weak forecast given on Tuesday.
Hewlett-Packard Co. (NYSE: HPQ) has started its assault of Cisco's market dominance by offering competitive products for massive discounts.
According to a source cited one small business customer in the report that has found life without Cisco products to be better on the bottom line. Kevin Gaffer, CEO of Renkim Corp. in Southgate, Michigan, said that he recently purchased switches from HP at a price that "couldn't be passed up."
Gaffer said that the discount saw him receive two switches for $361 each, while the quoted price from Cisco at nearly $5,000. Admittedly the HP switches were far more modest, but for a small business more than optimal.
"We're right there competing in that space" with Cisco, Marius Haas, H-P's senior vice president and general manager for networking, said.
HP's new CEO Leo Apotheker said that the company is winning market share in the switching sector.
While HP's switches business is improving, Cisco reported last month that its business saw a 7 percent drop quarterly revenue. Cisco's switch business accounts for about a third of its annual revenue.
Cisco is also seeing pressure from upstart Juniper Networks (NYSE: JNPR), which has grown its network-switching market share to around 2.3 percent from nothing in 2008. Juniper is planning to unveil a new suite of networking gear on Wednesday.
Forrester Research analyst Robert Whiteley said, "The competition is definitely heating up. As more viable competitors enter the market ... companies are getting a lot more confident in investing in Cisco alternatives."
Cisco CEO John Chambers has stated that the increased competition has nothing to do with price pressure from rivals, adding that the unsustainable discounts don't lead to long term solutions.
Shares of Cisco are trading flat on Wednesday in early market movement are $18.59. HP Shares are down 11 percent to $42.87 after its weak forecast given on Tuesday.
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