Core Acceleration

HP Competitive UpdateTools to Help You Close The Quarter

Cisco TV Broadcast07.07.2011

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Agenda

Michael Rau

Ross Fowler

Dean Eyers HP News / Events

Good Enough is Not Good Enough

Enhancing the Borderless Networks Value Proposition

Maintain Momentum

Q&A

Dean Eyers

07.07.2011

Dean Eyers Lessons Learned

Taking the Fight to HP

FlexNetwork

Organizational Changes

HP Competitive News / Events

HP Announced Significant Management Changes on June 13th, 2011

Positioning: Allow HP to better capitalize on strategic market opportunities

Executive Moves:

• Ann Livermore (EVP Head of Enterprise Business)

• Leaving day to day HP Enterprise Management Position, Elected to Board

• Dave Donatelli• Will report directly to HP CEO Leo Apothekar

• Peter Bocian (Chief Admin Officer) and Randy Mott (Chief Information Officer)

• Both depart HP, roles consolidated into Chief Information Officer role – TBH

Follows Early June announcement: Marius Haas (Head of Enterprise Networking) and

Michael Mendenhall (CMO) both departing HP

HP’s Organizational Changes

HP fighting with Oracle

• HP suing Oracle over the hire of former CEO, Mark Hurd

• HP suing Oracle over decision to cease supporting Intel's Itanium architecture

• HP knows Intel plans to end-of-life the Itanium microprocessor. “Knowing this, HP issued numerous public statements in an attempt to mislead and deceive their customers and shareholders into believing that these plans to end-of-life Itanium do not exist.” quote from Jon Stokes, ars technica

HP

• FlexNetwork Architecture solutions include:

• FlexFabric – Data center converged compute, storage, and storage solution

• FlexCampus – High performance, secure solution for media ready campus

• FlexBranch – Simplified, secure, best of breed branch solution

• FlexManagement – Consolidated, single-pane of glass management solution

• FlexNetwork locks customers into HP…

• …exposes them to HP high margin services

HP ‘Flex’es (Marketing) Muscles

• New FlexNetwork Architectures announced May, 2011

• Claim FlexNetwork is open to 3rd parties - ONE

• HP originally claimed a lack of overlap and said “we will keep all products for as long as customers will buy them”

• This was short lived… Initial EoS announcements focused on individual switches, recent on switch families

• So far, since the acquisition of 3Com, HP has announced EoS of 38 E Series switches

End Of Sale Continues on 3Com Products

Feb 2011: E6400 (ProCurve)E4200-12G E4210-16-PoE E5500G Series

March 2011:E5500 Series

April 2011:E4210 Series E4210G Series E4500 Series E4500G Series

June 2011: V1405 Series A3100 SI – Two slot models (H3C)

Confidential and Proprietary Information of Bleu Marketing Solutions Inc and its Clients © 2011

• Objectives: – Promote Cisco leadership in the Las Vegas airport to

incoming participants of the HP Discover 2011 event

• Reach:– HP’s largest user conference event - 10,000+

attendees for Discover 2011– Las Vegas Airport - 110,000 passengers daily;

7th U.S., 11th World

• Placements: – Banners in A & B walkways– Exit signage– Video walls in baggage claim– Baggage carousels in baggage claim

• Thanks to Jen Robinson and CMO BN Solutions Marketing

Taking the Fight to HP… Literally

Taking the Fight to HP

Taking the Fight to HP

Taking the Fight to HP

Taking the Fight to HP

Why We Win

• Strength of Customer Relationship• Architectural understanding

• Customer Pre-investment with Cisco

• Reliance on Cisco products/support

• Technical Advantages and Education

• EnergyWise / Medianet / TrustSec

• Ease of use – i.e. Auto Smartports

• Lunch and learn

• Highlighting HP technical deficiencies

Why We Lose

• Price• HP focus TCO discussions on CapEx

• Aggressive discounting (>75%) in lighthouse accounts

• Relationship• HP “buying the business”

• Disconnected account teams

• “Anyone But Cisco” attitude

• Bad technical experience issues

• Single Issue Technical Features• 10G switches with vPC-like features and physical size

requirements

• Lack of Competitive Readiness

Lessons Learned from War Rooms

Ross Fowler Beyond TCO

Network TCO

Architectural TCO

Key Insights

Enhancing the Borderless NetworksValue Proposition

Overall Approach for Cisco vs. HP Economic Argumentation

Key InsightsTCO is a better metric than CapEx to assess network cost because it considers the full impact on IT spend, including CapEx, services, labor, bandwidth, and energy

Cisco BN architecture is at 4% premium over HP on TCO, making a more compelling case than 30-50% CapEx difference claimed by HP

Even on an economy network, Cisco is at 7% TCO premium over HP, confirming a compelling economic argument for all customer segments

Labor savings is the single biggest advantage Cisco has over HP; labor constitutes 50% of TCO and Cisco delivers 5-10% labor savings driven by unified wired and wireless, embedded security

A quality network drives benefits beyond TCO, includingCustomer-specific benefits such as longer hardware refresh cycle, EnergyWise savings on endpoints and building energyBusiness benefits such as improved network uptime, higher user productivity and lower threat of security breach

1234

5

Architecture TCO: Near parity with HP, driven by labor and bandwidth savings

Network TCO: Even on an economy network, Cisco is at 7% premium over HP

Beyond TCO: Customers can realize further benefits in energy and hardware refresh cycles

Hardware refresh

Endpoint energy management

Building energy management

Cisco benefit Economic impact

Cisco vs. HP comparisons not included in TCO calculations, dependent on specific customer situations

6-8 year lifecycle for Cisco access and distribution switches and aggregation routers versus potential refresh by year 5 for HP

~5% increase in HP TCO

Network based energy management for laptops, VDI, IP phones and other endpoints

Integration of EnergyWise with building energy controls

~9% decrease in Cisco TCO

~3% decrease in Cisco TCO

Could make Cisco up to 13% less expensive

than HP!

The Optimistic Marketing Message: Parity with HP, driven by labor/ bandwidth savings and equipment lifecycle

Beyond TCO: Quality Cisco network delivers significant business benefits

1 additional security threat avoided per year compared to competing solutions

Network downtime decreased by ~1 minute per year

Productivity increased by ~1 hour per employee per year through mobility, higher video QoS and application optimization

1%, 4% or 7% premium for Cisco justified if…

What does this look like for your company?

Your sales force does not lose access to their quoting tool

You are not waiting several minutes for each access to the ERP system

You don't spend video conference time discussing video quality but rather discuss the decisions to be made in the meeting

Mobile employees access data securely from any device, anytime

What must you believe?

You do not spend several days to detect, notify and respond to security threats, or lose business as a result

OR

OR

Salesperson’s first discussion with customer should discern architectural vs. economy network buyer

Is the customer an architectural

buyer?

Focus for today’s discussion

Architectural TCO

“Yes” to >=4 of the 8 questions

“No” to at least 3 of the 8 questions

Does customer rely on high

network performance?

Network TCO

Product sale

Yes

No

Can the customer envision

becoming an architectural

buyer?

Yes

No

Does the network buyer’s job depend on a certain level of network uptime or SLAs?

Has the customer been targeted for a cyber security attack in the past year?

Does a large portion of the customer’s employee productivity depend on wireless and video?

Does the customer have a predominantly Cisco network? Does the customer use infrastructure for full lifecycle (not refresh in 4-5

years even if equipment is functional)? Does the customer wish to enable corporate data access through

consumer devices? Does the customer have large information databases or regulatory

requirements? Does the customer expect >30% of traffic to be video in the next 18-24

months? Does the customer have >30% mobile workforce e.g., sales? Does the customer run high-performance applications in-house or from

the Cloud? Does the customer emphasize energy management and sustainability?

Ross

Refer to TCO presentations and your video on Core Acceleration website.

Next slide gives URL.

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Core Acceleration Websitehttp://wwwin.cisco.com/WWSales/csinitiatives/core_acceleration.shtml

Michael Rau Catalyst Switching

BN Services Innovations

HP vs Cisco

BN Architecture

Good Enough is Not Good Enough

Borderless Network Architecture

Architecture for Agile Delivery of the Borderless Experience

BORDERLESSINFRASTRUCTURE

Application Networking/ Optimization

Switching SecurityRoutingWireless

BORDERLESS NETWORK SYSTEMS

BORDERLESS NETWORK SERVICES

BORDERLESS END-POINT/USER SERVICES Securely, Reliably, Seamlessly: AnyConnect

Mobility:Motion

App Performance: App Velocity

Energy Management: EnergyWise

Multimedia Optimization:

Medianet

Security:TrustSec

CoreFabric

Extended Cloud

ExtendedEdge

UnifiedAccess

POLICY

MANAGEMENT

SMART PROFESSIONAL AND TECHNICAL SERVICES: Realize the Value of Borderless Networks Faster

APIs

A “Good Enough” Network

Application and Endpoint Ignorant

An Enterprise Next Generation Network

Basic QoS

Support through Basic Warranty

Security as a Bolt On

Acquisition Cost

Standards Based

Application Intelligence with Optimization,Endpoint Intelligence, Location & Policy

Media Aware Control to Support Voice/Video Integration

Warranty + Intelligent Services with Integrated Management

Integrated Security from Premise to the Cloud

Investment Protection & ROI

Standards + Innovations Driving Standards

Single Purpose Unified (Wired/Wireless/VPN, Building and Energy Control)

Context-Aware, Prioritized, High-Quality Voice and Video

No Resource Reservation, Degraded Voice and Video

CEO Meeting

M&A Negotiation

Sports Event

GLOBAL BUSINESS,

WORLDWIDE OFFICES

Can My Network Deliver Real-Time Collaboration Experiences?

CEO Meeting

M&A Negotiation

Sports Event

MedianetTransform Voice and Video Experiences

Medianet Innovations

• IPSLA VO (Video Operations) & MediaTrace

• Collaboration Manager

• Media Services Interface (MSI)

• ISRG2 Video DSP’s

Managed Nightly Shutdown

$280,000

Additional Energy Policies

$150,000

Annual Energy Costs

$770,000

Am I Using My Network to Reduce My Energy Costs?

Countywide OfficeEnergy Management

No Energy Management

Total Savings

$430,000

COUNTY OFFICES

10,000 PCs

EnergyWiseReducing Energy Costs

EnergyWise Innovations

• EnergyWise IOS Software and API Interface

• Prime LMS Energywise

• Ecosystem of Partners for Energy Management“Light Bulb Moment: Lenovo and Cisco Help Businesses Manage Energy via Smarter PCs and Intelligent Networks”

• Universal POE (UPOE)

Policy and TrustSecCentralized Management, Context-Aware Enforcement

FlexibleCentralized

DIVERSEUSERS, DEVICES,

DATA

Do I Have a Consistent Access Policy ArchitectureAcross My Network for All Users and Devices?

InflexibleHard to Manage

Wired

Wireless

VPN

SimpleComplex, Multi-dimensional

TrustSec Innovations

• Identity Services Engine (ISE)The best Security Product engineered by Cisco in 5 years to fit our Customer requirement on Identity and Policy enforcement on the Network – Recent CSE at Borderless Networks VT

• MACSec

• SGT’s and SGACL’s

• AnyConnect

Catalyst Access Switching and MobilityEnabling the Next Generation Workspace

Benefits

Catalyst 2960-S• Competitive feature set at

compelling prices• Reduced TCO with Smart

Operations

ENABLING THE BORDERLESS EXPERIENCE

HighAvailability

Catalyst 3K-X Catalyst 4K

Traditional Workspace Next Generation Workspace

Data Voice Any Device HD Video

Lower TCO

PoEEnergywise

VideoMedianet

SecurityTrustSec

VDI

Where to Get More Informationhttp://newsroom.cisco.com/feature-content?type=webcontent&articleId=362226

Dean & Ross: Close on Mike’s video.

How to two tie together key point’s from Mike’s video and the TCO discussion to make business sense to the CFO?

“It’s not for less, it’s not Cisco.”

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Dean Eyers Switching Market Share

Taking the Fight to HP

UCS Market Momentum

New HP SI Agreement

Maintain Momentum

New HP SI Agreement Implemented on May 25• Replace the HP Transitional Systems Integrator Agreement with a contract that

reflects the evolving relationship between Cisco and HP

• Provide HP the ability to continue to sell Cisco products and services, recognizing that many existing HP customers will continue to want to purchase Cisco products and services through HP

• Provide HP with pricing and access to Cisco information that reflects HP’s status as a competitive partner

• Empower Cisco account teams to decide whether or not to grant HP additional discount through the DSA process

• Monitor HP’s resale and service entitlement activities for any violations of the agreement

• No longer able to directly sell ATP products after August 1st, and reducing the standard discount on outsource/managed service accounts to 32% on August 22nd

Campaign to maximize impact of Cisco achieving #3 in WW x86 Blade Servers validated Cisco’s position in server market

UCS Market MomentumCompetitive Intelligence

Taking the Fight to HP – McCool on Tour

• Cisco received ITU-T award for outstanding Next Generation network contributions

• Cisco partner for customer success and interoperability: VMWare, Citrix, NetApp, Intel

Total Switching Market Share TrendsCisco Share L2-L3 (excl. Unmanaged)

Source: Dell’Oro, calendar quarters

Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'110%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$2

$4

$6

72.6%70.7% 70.4% 71.6%

75.2%72.4% 72.8% 71.3%

69.5%

51.3% 49.9% 50.2%48.1%

54.7%52.4% 53.1%

50.9% 50.4%

Market Revenue Cisco Rev Share Cisco Port Share

$B

Nx5010Nx7K-F132XP-

15

Nx2148

Cat2960-S Cat4500E

Nx1010

Nx5548

Nx4000

Cat4948E

Cat3750-X

First Customer Ship

ACE30

Multi-hop FCoE/Nx5000

Nx5596UP/ Nx5548UP

Total Switching Market Share Trends + HPCisco Share L2-L3 (excl. Unmanaged)

Source: Dell’Oro, calendar quarters

Q1'09 Q2'09 Q3'09 Q4'09 Q1'10 Q2'10 Q3'10 Q4'10 Q1'110%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$2

$4

$6

72.6%70.7% 70.4% 71.6%

75.2%72.4% 72.8% 71.3%

69.5%

51.3% 49.9% 50.2%48.1%

54.7%52.4% 53.1%

50.9% 50.4%

Market Revenue Cisco Rev Share Cisco Port Share

$B

HP Rev Share

9.9% 10.6% 10.5%9.3%

10.5% 10.3% 10.5% 10.5% 11.9%

21.3% 21.8% 22.5%20.5%

19.9% 20.3% 20.3% 20.3% 20.9%

HP Port Share

Bust the Myths, Expose the Truth

• Bust the “Good Enough is Good Enough” Myth

Medianet, TrustSec, EngergyWise, Fabric Path, UCS

• Bust the TCO Myth

• Bust the HP Innovation

Catalyst 6500 –Sup2T

Nexus Family

ISR G2

CleanAir, TrustSec –Policy Control, Virtualisation, High Availability

Gartner spoke favourably of Cisco DCV and UCS

Where do you go for Information

• Selling Competitively:http://iwe.cisco.com/web/competitive

• Core Acceleration http://wwwin.cisco.com/WWSales/csinitiatives/core_acceleration.shtml

• Engage the HP War Room:http://wwwin.cisco.com/go/got Martin CookLuna ChiuFred Manicom

Questions and AnswersPlease submit your questions now.

Seed Question

How does the TCO model work in markets where the labor rates are lower?

Next Slides are TCO Back-up Slides.

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LABOR COSTSAppendix

Thank you.