HP ProCurve: Should it stay or should it go?
Published: 01 Mar 2006 12:20 GMT
Is ProCurve Networking's best chance of standing up to the market-leading giant Cisco to continue as a subsidiary of HP, or should it become a completely separate company?
According to John McHugh, the vice-president and general manager of ProCurve, the company itself is waiting to see what will happen.
There has been speculation about the future of ProCurve for several years. While the ProCurve division of HP is doing well in the market, many believe it could do better if it was cut free from the coat-tails of HP.
Speaking at NetEvents in Garmisch, German, last week, McHugh said that there were clear advantages to ProCurve becoming a separate company.
"If you look at the system suppliers like IBM... they left the networking business. There are clear advantages in doing that and leaving it to the specialists who are focused on the area," said McHugh.
Splitting off would help ProCurve to work with companies, such as Dell, who compete with other areas of HP's business but don't do networking. At present, they may be reluctant to deal with ProCurve as they don't want to give money to a rival.
But McHugh also argued that there was "a clear case" for remaining within HP. "The are clear advantages to ProCurve in having such a close relationship with a company that is a clear leader in so many areas of the business."
Analysts broadly agree that staying with or leaving HP is a difficult call to make.
"ProCurve could do well as a separate company," said Andy Buss, senior analyst with Canalys. "But it could do well as part of HP. The key question is: What is the top-level commitment to ProCurve at HP? ProCurve needs to make that strategic decision and to do that it needs help from HP."
Part of the answer to that lies in services, according to Buss. "If ProCurve stays at HP it will be because it can see the revenue generation from services."
There is a third option, according to Dean Bubley, analyst with Disruptive Analysis. "HP could sell the business," he said. "It is difficult to make a call between any of the possible routes. But I do think they have to do something to make the strategy clearer."
Meanwhile, McHugh must wait and see. "Mark [Hurd, HP's president and chief executive] knows my feelings on this and it is his call, but right now he has other things that need his attention," said McHugh with a smile. "We will see."
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