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Computing and IT giant Hewlett-Packard said today it will add to its line of networking products by essentially re-selling equipment and software developed by two other companies, Accton Technology and Cumulus Networks.
Accton builds network switches used to direct and manage traffic inside corporate data centers, and Cumulus develops and supports the operating system software that runs on them. It’s a big win for Cumulus, which has raised about $50 million and change from venture capital firms including Andreessen Horowitz, Battery Ventures and Sequoia Capital.
The move is a bid by HP to try and disrupt the data center networking business dominated by networking giants Cisco Systems and Juniper.
Companies usually buy networking gear and the software that runs on them from the same vendor. Now companies are interested in buying their networking equipment the same way they buy their servers: Hardware from one vendor and software from another. It’s a trend that’s often referred to as network disaggregation. HP rival Dell has been getting into this business, too, and has its own deal with Cumulus.
Why do it? Companies are avoiding the new naughty phrase in building data centers: Vendor lock-in. When a company wants to change who its buying its equipment from — maybe to get a better deal — it’s easier to do when the hardware and software are interchangeable.
The trend complements the growth of software-defined networking, another big trend that companies in the networking business are trying to get their arms around. That’s where companies build their networks with simple hardware and use software to set the rules for how data flows on their network. If they need to make a big change, they simply make changes to the software; that means less reason to swap out hardware, which can be expensive and time-consuming. It would amount to another big change — and represents a potential challenge — for vendors like Cisco, which for years have designed specialized networking hardware.
Networking is still a relatively small but growing business for HP. It is made up mostly of the business it got when it acquired 3Com in 2010. In 2014 its networking unit posted about $2.6 billion in revenue, up from $2.5 billion the year before, making it one of the few places where HP has reported consistent revenue growth. Yet at that size the networking business amounts to less than 3 percent of overall sales, so its impact to the bigger picture at HP is a bit limited.
That will change when HP splits into two smaller companies later this year. If HP’s $28 billion Enterprise Group were a separate company now, networking would account for almost 10 percent of sales.
Cisco’s switching business is much bigger, amounting to about 30 percent of the $47 billion in sales it reported in fiscal 2014, and while it has been under pressure over the last few years, it appeared to bounce back when Cisco reported financial results last week.
Update: An analyst at has just poured some water on the idea that this type of open switches that HP is going to start selling next month represent much of a threat to Cisco. In a note just just hit my inbox UBS analyst Steve Milunovich argues that these open switches, sometimes called “brite boxes” don’t appear to be much of a threat to Cisco. “There is increasing evidence that there is a portion of the market, especially the larger web-scale players and some sophisticated enterprises, desiring a more open switching model,” he writes. “However, we remain doubtful that there is broad appeal across the larger enterprise customer base for brite boxes yet.”
This article originally appeared on Recode.net.
