HP Moves To Outflank Cisco And Juniper

| About: HP Inc. (HPQ)
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The idea of an automated network capable of responding to the demands of cloud (infrastructure 2.0) has taken a step forward with HP's OpenFlow announcement. Time will tell how serious HP (NYSE:HPQ) ultimately is about SDN, and building out a more software-centric networking line that can flank the incumbents (i.e. Cisco (NASDAQ:CSCO) and Juniper (NYSE:JNPR)); regardless, this announcement indicates that they've figured out how they can acquire and partner their way into the network industry tent.

HP could ultimately grow the tent by doing to the network appliance what VMware (NYSE:VMW) did to the one app server. The result could be a substantial step forward for the evolution of private clouds.

See Cisco and the Networking Industry: Golden Age or Golden Fleece? for background on the coming battle between software-centric and hardware-centric networks and why software may ultimately triumph.

SDN will enable more robust features and functionality, more scalability and more interoperability. It could give network hardware outsiders like HP, Dell (DELL) and even VMware a competitive advantage over any existing hardware-centric provider still steeped in lock-in and product "incrementalism".

At stake is the future revenue flow and margins of hardware-centric network products as well as the potential rise of a host of network players who can decouple network management (from IPAM to application delivery) and security from the current scheme tied to specific hardware at a specific location.

If HP can build and partner a robust networking ecosystem that incorporates the OSI stack, it could be as effective as VMware's internal and external ecosystem - that gave rise to the commodity server and drove virtualization into production data centers.

HP, VMware, Microsoft (NASDAQ:MSFT) and Dell are all similarly capable of disrupting the traditional network hardware market ... if they can assemble enough of the pieces and achieve first mover advantage.

This announcement by HP means "game on!"

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.