Hewlett-Packard's ProCurve Networking, the second largest enterprise network equipment vendor, recently announce its vision for the next five years: Adaptive Networks.
I met with John McHugh VP and general manager of ProCurve Networking. This HP business has been growing at about 25 per cent per year over the past five years, a fast pace of growth under the leadership of Mr McHugh, a 25 year HP veteran who joined straight out of college.
It is an impressive achievement, especially since few people associate HP with network equipment. Yet it is precisely this fact that has helped ProCurve build its business.
Looking at Mr McHugh's business card, the HP logo occupies a tiny piece of the real-estate, and that is done on purpose. Mr McHugh's insight was to keep the HP name low-key, knowing that that would help ProCurve establish a distinct identity and communicate an image of a singularly focused business.
"I didn't want to make the same mistakes that others have done, such as Dell, where its network business is seen as ancillary to its main business. ProCurve is full of people that are veterans in the network business, we speak the same language as our customers. And we re-invest about 12 per cent of our revenues in R&D. These things are very important to network equipment buyers," said Mr McHugh.
ProCurve's focus comes at a time when market leader Cisco Systems is moving into consumer and other markets. Cisco also talks about the network being the computer, a tag that was often used by server vendor Sun Microsystems and brings up associations with processing rather than networking.
ProCurve is sticking to its core mission, to make better networks. And Mr McHugh credits Procurve's focused strategy for some large wins from companies that used to only buy Cisco equipment. Procurve prices are less than those of Cisco, and there are no annual maintenance fees--factors which play especially well in educational and government sales.
"We are less expensive than Cisco, but that's not why people switch. We have to do more for less, it is not enough just be cheaper," Mr McHugh says. "And we have to show customers that we have a vision, that we have the technologies and the foresight to be able to help them deal with issues now and several years away."
And that's where the unveiling of the Adaptive Networks vision comes into play. It is about placing more intelligence at the edges of the network; it is about having management systems that make complex networks easier to administer; and increasingly, it is about being able to implement business policies across an entire IT infrastructure because of regulatory and audit requirements.
And because ProCurve has had to grow up within a world that required its equipment and systems to be able to interoperate seamlessly with that of other vendors--its Adaptive Networks strategy is one that can be integrated existing networks.
Announcing a clear strategy to network buyers now, is also good timing. A lot of companies upgraded their networks to deal with the millennium bug. Companies refresh their network equipment between five and ten years, with seven years being the average, that means many networks are now ripe for replacement.
ProCurve has benefited from keeping the HP name low-key and from taking advantage of its HP connection. For example, it deploys sophisticated security technologies developed within HP Labs. And from the development of powerful switching chips that add a lot of intelligence into the edges of an enterprise network.
Those chips are adaptive in that they can be reprogrammed on the fly, essential in being able to adapt to changing security threats, changing regulatory demands, and changes in business applications.
However, predicting the future is notoriously difficult, and there is one technology that could derail the network industry from building more intelligence into networks, and send it back 20 years into the stone age of dumb data routers. This potentially disruptive technology is called IPsec.
It allows computers to create an encrypted communications channel that tunnels through a network system. It carries its own intelligence and therefore the network is just shuttling packets.
IPsec is part of Microsoft Vista, and it is turned on by default. Corporate Vista buyers get an intelligent software based networking technology for free. IPsec could be used in a way that could extend the life of existing networks.
Mr McHugh says "I'm keeping an eye on IPsec, especially since we don't yet know how people will use it."
ProCurve's strategy is to be able to work with IPsec and to become the larger "wrapper," adding capabilities to IPsec streams and thus be able to hang onto the value-add intelligence piece of the network equipment market.
[Coming up: John Roese, recently appointed CTO of Nortel tells me about Nortel's "burn the boats" business strategy.}