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It's been a tumultuous year of corporate change for Hewlett-Packard Co. CEO Mark Hurd, who replaced ousted chief executive Carly Fiorina in March and is now restructuring the Palo Alto, Calif.-based tech vendor.

ProCurve's latest products Read the first part of our two-part series on HP ProCurve: HP strengthens its core.

His first big move has been the planned elimination of 10% of HP's workforce, up to 14,500 jobs, in an effort to save $1.9 billion annually. It has prompted speculation that Hurd will soon sell ProCurve, HP's enterprise networking unit, to refocus on its core markets, printers and computers.

A BusinessWeek article last month cited an anonymous source who said HP was in talks to sell ProCurve to one or more private equity groups. Estimates list the ProCurve unit's value at around $700 million, hence it likely represents a tiny segment of HP's $83 billion in annual revenue.

Impressive growth

In an interview with SearchNetworking.com, Darla Sommerville, vice president and general manager of HP ProCurve for the Americas, declined to address a potential sale, instead emphasizing ProCurve's recent strides.

"I can't comment on the future," Sommerville said. "The key thing is we continue to invest in networking technologies, deliver unique solutions -- we're No. 2 in the Ethernet LAN market -- and we've outpaced market growth in last three years and we continue to see strong growth."

Seamus Crehan, director of Ethernet switch research for Redwood Shores, Calif.-based research firm Dell'Oro Group, validated those numbers, saying ProCurve has made impressive progress as of late. Its data for the most recent quarter shows HP's quarter-over-quarter gains in per-port shipments reached 30%, while the market on average grew at 13%.

I can't comment on the future. Darla Sommerville VP and GM, HP ProCurve for the Americas

"It's impressive growth, any way you look at it," Crehan said. "HP tends to price its products aggressively so that, on average, it offers a lower price per-port than the overall market, which has helped its growth."

'Beef up' or sell?

Sommerville declined to reaffirm HP's commitment to ProCurve, or provide detail on long-term strategies, which may suggest that HP either intends to sell the unit, or at least has yet to decide its fate.

Robert Whiteley, analyst with Cambridge, Mass.-based Forrester Research Inc., indicated that HP could just as easily "beef up" ProCurve to tackle Cisco Systems Inc. head-on, or sell the unit and refocus on partnerships.

Whiteley said one possible strike against ProCurve is that in HP's corporate hierarchy, it resides in the company's emerging technologies unit, isolated from HP's other enterprise product groups, such as servers and software.

The result, Whiteley added, is that ProCurve products aren't closely aligned as they could be with products like its ProLiant servers or OpenView systems management software, reducing the benefits of an all-HP infrastructure.

The networking giant

Also complicating matters is HP's partnership with Cisco. The companies have a long-standing support and integration partnership, and if ProCurve continues on its current path, Whiteley said it may compete more directly with the networking giant, hurting a strategic relationship that other business units may depend upon.

"If you look at Cisco's strategy, it is ramping up on the management front and putting more functionality into the network with its AON network middleware," Whiteley said. "My speculation, as an analyst, is that eventually Cisco is going to upset that relationship regardless. So does HP want to protect itself, or does it want to abandon networking and work with Cisco?"

My speculation, as an analyst, is that eventually Cisco is going to upset that relationship [with HP] regardless. Robert Whiteley Forrester Research

On the flip side, Whiteley said all signs point to healthy profits in the ProCurve group -- the company doesn't break out revenue figures for specific businesses -- suggesting there's no immediate urgency to shed the business.

Plus, he said it would be a strategically sound move for HP to reposition ProCurve with its other enterprise business groups and augment its product line without landing directly in Cisco's crosshairs. Such a move could in fact strengthen its push to be seen as a vendor on the cutting edge of data center technology integration.

'A negative thing'

Regardless, the uncertainty presents an unsettling scenario for customers. Jason Blosser, director of IT for Manchester Community College in Manchester, Conn., manages a large HP-based infrastructure, including desktops, printers and servers, plus a sizable network of ProCurve core and Layer 3 switches.

"My gut reaction is that it would be a negative thing to do," Blosser said of a potential sale. He fears losing the synergy among HP's different products, involvement in HP's research and development processes, competitive pricing -- especially compared with Cisco -- and excellent technical support.

"Their software support model -- free upgrades and free telephone support -- is a real compelling story," Blosser said.

Blosser also hopes to avoid the pain involved with unplanned migrations. His organization was recently faced with such a scenario when its Fujitsu PBX was discontinued.

For more information Download our white paper on the case for HP ProCurve gear. Get advice on configuring an HP core switch for a VLAN. Read more articles written by News Editor Eric B. Parizo.

"That was an extremely painful process," Blosser said. "Nobody knew what the roadmap was, and everything was up in the air for a year or more." His group is working to replace the PBX with a VoIP implementation.

Healthy and growing

But Dell'Oro's Crehan said ProCurve's investment in fast-growing segments like Layer 3 and Gigabit Ethernet switching, along with its purchase of Riverstone Networks, suggests that HP is unlikely to sell ProCurve anytime soon.

"I'm not privy to their internal plans," Crehan said, "but even if ProCurve networking was to be separate from HP, it's still a very healthy and growing Ethernet switch business."

Customers may be compelled to hedge their bets when it comes to ProCurve, but Whiteley said the most likely scenario is that HP commits to ProCurve long term and strives to become a strong No. 2 in the market. Plus, he said, its solid track record, low per-port price points and lifetime warranties make ProCurve a solid investment.

Added Whiteley, "I don't think existing ProCurve customers or those considering ProCurve gear should be worried."

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