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HP’s ProCurve Sale Rumors Leave VARs Wary

Since rumors hit the channel that Hewlett-Packard was seeking buyers for ProCurve, its Ethernet switching unit, resellers of the solution have been taking a wait-and-see approach. Hewlett-Packard Co. declined to comment on the reported sale, word of which first surfaced in the Aug. 16 issue of BusinessWeek magazine, but channel partners of the Palo Alto, […]

Written By: John Hazard

Aug 26, 2005

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Since rumors hit the channel that Hewlett-Packard was seeking buyers for ProCurve, its Ethernet switching unit, resellers of the solution have been taking a wait-and-see approach.

Hewlett-Packard Co. declined to comment on the reported sale, word of which first surfaced in the Aug. 16 issue of BusinessWeek magazine, but channel partners of the Palo Alto, Calif., company said the news was something they would keep in focus in coming weeks, as a change in ownership could change their relationship with the product.

“We have a lot of faith in the HP brand,” said Brent Besonson, a technology business consultant at Net Xperts Llc., Pittsburgh. “That wouldn’t necessarily change if they sold the company, but I would think about it.”

Besonson said he doubts the rumors are true.

Even if the sale occurs, it does not necessarily mean trouble for resellers, said Allison Daylong, an account representative at Network Technologies Inc., Lenexa, Kan.

“Not every sale turns bad,” she said. “Look at the IBM Lenovo sale; everyone was pretty pleased with that.”

According to BusinessWeek, which cited anonymous sources involved in the process, the sale could occur within the next two to three weeks, to Francisco Partners of Menlo Park, Calif. Francisco Partners also declined to comment.

HP’s newly installed president and CEO, Mark Hurd, has said he intends to restructure the company to improve efficiency and focus on HP’s core business. The company will ultimately cut 14,500 jobs or 10 percent of its workforce, and dissolve its Customer Solutions Group sales units. HP’s third quarter earnings report released last week showed a $73 million profit, compared to $586 million in the same period a year earlier.

ProCurve is a major provider of Ethernet switches for LAN in the SMB (small and midsize business) market, but holds the No. four spot in the overall market behind Cisco Systems Inc., which provides LANs to nearly three-quarters of the market.

For VARs associated with ProCurve, the most pressing concern would be the effect on the brand’s identity, which could suffer from the sale.

“Customers don’t necessarily know ProCurve,” Besonson said. “I know it, and I have been happy with their product, but customers only know it’s an HP product. If ProCurve were to go elsewhere, I would probably actually look for another HP product to replace it.”

Confidence in the product also matters to solutions providers who have come to trust HP and would have to test a new vendor, Daylong said.

“One of the things we’ve always liked is that it’s a lifetime warranty and it’s backed by somebody you know,” Daylong said. “It would be a slight discomfort, slight, if that weren’t there. Really, it’s made by the same people, and it’s probably backed by the same, but you don’t know that right off the bat.”

HP’s ProCurve Sale Rumors Leave VARs Wary

John Hazard

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