SAN FRANCISCO -- Cisco channel partners grumbled at the price tag for the company's unified computing system data center product, versus comparable products from HP, but on the whole they say it's not holding back sales.
"It's where the money is," said one VAR at this week's Cisco Partner Summit here.
"HP has cheaper server products so you can sell up, with Cisco you have to sell value," said John Lemkuil, president, Computec Engineering, Japan.
He's sold a handful of UCS products to large web-based companies. He said "clients have to have special needs" such as high-throughput to see the best results from it. "They have to believe in the virtual data center strategy which is still in its infancy."
Pedro Viudez, a director at Enterprise Outsourcing, a global IT outsourcing provider installed the UCS at four of its data centers and sold it to companies in the pharmaceutical and consumer goods markets. He said it's more expensive than HP's converged infrastructure products, but he believes customers will pay for the brand.
"Cisco has established a level of quality, they are not a commodity player like Dell and HP," he said. Enterprise Outsourcing generates about $100 million of business a year selling Cisco products and services.
It appears that Cisco's brand in networking is spilling over into the server market. Russ Johnson, director of technical services at TFE Connect, based in Hewitt, TX, is looking at the UCS, but hasn't had time to focus on it yet. He believes the price premium for Cisco's data center products is fair enough when the company is sinking billions of dollars into R&D. "Someone has to pay for innovation," he said. "Some customers are willing to pay for innovation and some aren't, it depends whether you see technology as an enabler or a never-ending expense to the organization." He said "it's about priorities … people do see value in premium brands."
Not all Cisco partners agree.
Cisco VARs: Get UCS price down
"The pricing needs to be more competitive … it's out of wack on components," said Arash Emamy, managing director, principal consultant, at Koios Systems, based in Vancouver. "We're talking about RAM and hard disk drives, these things are a commodity now … It's hard to position against HP and IBM … it doesn't help convince customers when there's a 30% price difference," Emamy said.
His comments seem to buttress contentions by HP CEO Mark Hurd earlier this week that HP's huge server and PC businesses give it pricing advantages when it comes to buying components for its converged data center gear.
Emamy acknowledged that Cisco is pushing a new architecture that is better aligned with virtualization than competing products, but whether that results in cost savings and easier management remains to be seen.
Another large VAR that works with both Cisco and HP, said that while Cisco UCS generally carries a premium, it really depends on who builds it out; whether it's optimized to use lower cost memory and what type storage and network connections are used. In some configurations, UCS is quite price-competitive with HP, he said.
Cisco chairman and CEO John Chambers said during a press conference on Thursday that his company is not in the business of delivering commodity products, or, focusing on individual competitors, in response to questions about competing with HP.
Then he bragged that Cisco holds the number one position, over HP and IBM, for VMware's VMMark benchmark for UCS on Intel Xeon for 8 core 2 socket systems. VMMark measures application performance on x86 machines running VMware. It's not very helpful for Citrix XenServer or Microsoft Hyper-V users, however.
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