Everything is topsy-turvy in the network industry. Prices are falling, margins are shrinking, and vendors are merging just to survive. In the middle of this turmoil, Hewlett-Packard sees an opportunity in the network hardware space. The company earlier this year introduced the ProCurve line of switches and last month named John McHugh the new general manager of its workgroup networks division.
McHugh, who recently headed up the development of HP's JetDirect print-server business, points out that HP has experience competing in commodity markets, and has a successful joint marketing arrangement with Foundry Networks. On the other hand, HP has recently suffered from flat earnings and revenue. IDG's Jeff Caruso caught up with McHugh to find out what's next for HP.
IDG: You're primarily focused on the workgroup segment. How do you define that? Where are your boundaries?
McHugh: In the LAN space, we can provide a solution for a customer of really any size. Through references to Foundry products, together with our own line, we think we have a great solution for anyone who has an Ethernet switching network problem.
How would you go after very large networks?
Right now, we reference a routing switch from Foundry. We use that as the top end of the structure and build a fan-out network using our switches.
Any plans for ATM in the backbone?
We've tried to focus pretty aggressively on Ethernet. In the backbone area, I know Foundry has some plans for some ATM-type functionality, and we may use partnerships to try to deliver some connections into the backbone. But my investment and my focus will be in Ethernet switching. Certainly Gigabit Ethernet is prevalent right now, and 10-Gigabit is sitting out there on the horizon. It will probably be here in three or four years.
How far do you think HP can expand into WAN connectivity?
We really don't have any plans to try to break into that market. There are some pretty entrenched leaders, and it's a very different selling model.
Looking at workgroup networks, there's a trend toward commoditisation. How do you see HP differentiating itself in that kind of an industry climate?
We expect to be the low-price player in the market. We're really driving toward switching at the cost of hubbing.
There's been some consolidation in the network industry. What impact is that having on HP's network business?
Frankly, we're quite inspired by it. As we've shown in the PC business, HP can be a survivor in a market that is going through a shakeout.
What impact is HP's overall financial picture having on the network equipment group?
It's definitely being felt, no question about it. It has really caused us to make difficult choices about what our opportunities are and what our focal point will be moving forward.
Does HP still support 100VG-AnyLAN?
Yes, we do. We continue to see pretty good orders in that space. We are committed to continuing to provide functionality for those customers and have ways to integrate that functionality with the rest of their network infrastructure.