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hpNOW, the worldwide newsletter for Hewlett-Packard employees, recently featured ProCurve Networking in an article titled, "Networking Nimbleness." It included a question-and-answer session with ProCurve VP and General Manager John McHugh, who addressed how the ProCurve business fits in HP. Here are excerpts from that article:
ProCurve's John McHugh answers questions about HP's fast-growing networking business
Did you know that HP has been in the networking business for nearly two decades? Or that its networking business unit, named "ProCurve Networking by HP," is the world's second-largest enterprise networking company, behind only Cisco? ProCurve remains a hidden gem within the company.
John McHugh, a 25-year veteran of HP, is responsible for ProCurve's overall worldwide operations, strategic and tactical planning and business development. Under his direction, ProCurve has achieved unprecedented growth in revenue and market share through striving to offer the industry's most reliable networking equipment and premier support services.
hpNOW, the global newsletter for Hewlett-Packard, recently sat down with McHugh to discuss the ProCurve networking business.
Questions and Answers:
hpNOW: Can you provide an overview of the organization, in terms of number of employees, global sites, etc?
McHugh: Sure. HP has been in this segment for more than 18 years under different brand names, including EtherTwist and Advancestack. We've been called ProCurve since 1998.
| Overall, the ProCurve business unit has approximately 800 employees, primarily in Roseville, California. However, we also have personnel throughout North America and in Europe, Asia Pacific and the Middle East.
We have a sales and support staff of roughly 250 people worldwide and approximately 300 or so in R&D. The remaining 200-plus people are broken down by administration, manufacturing, finance and marketing.
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The turning point for HP was when we decided to stop selling networking as an accessory to a bigger IT solution sale and started selling networking as a competitive open-market networking player. |
hpNOW: What kind of products does ProCurve offer, and who are its primary customers?
McHugh: We offer nearly 200 different products, including various switches, routers, WAN and wireless solutions, access appliances, VPN and firewall solutions. Our customers regard our products as second-to-none in terms of their reliability. That's one of the reasons we've been so successful.
The market we pursue is the enterprise network and equipment market. ProCurve is focused on medium- to large-sized corporate customers—both in the public and private sectors. We provide the infrastructure and services that those customers use to provide network access and network communication within their businesses. That includes advanced switching architectures, network management capabilities, traffic control utilities and a wide variety of mobility solutions, security capabilities and access control.
Our business is housed under the Office of Strategy & Technology, under Shane Robison, which gives us close linkage to HP's development team.
hpNOW: Why is ProCurve not under one of the business groups, such as TSG (the Technology Solutions Group)?
| McHugh: It has a lot to do with the unique nature of the customer we sell to and the business model that we structured to provide the most precision in how we interface with customers and build the business—which is very customer-driven and focused on the uniqueness of our market segment. |
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We design products that play well with every other vendor's solutions, so customers have choice. |
While the business is 18 years old, until 2001 we were under one of the major business units within HP. What we kept finding was that for the sake of efficiency or leverage within that business unit, our sales and marketing activities were too integrated with what the larger business unit's objectives were, so we were not as competitive as we could be.
In 2001, we proposed that we be moved under the Office of Strategy & Technology to enable us to clearly focus on open-market competitiveness and run our network-specific business model the way that our customers and the market demanded that we act.
hpNOW: What differentiates ProCurve from its competitors?
McHugh: I think there are five areas of focus that differentiate us from our competition.
First, we've been in the business for nearly two decades, and our experience and expertise enables us to offer both advanced and differentiated solutions. We're heavily investing in our own switching architecture, our own Network Management and our own advanced security technologies. That enables us to have fundamentally differentiated technology solutions.
Second is our unparalleled focus on ease of use. Our engineers are not investing to make complicated products, but instead are working on doing implementations that are very clean, very robust and easy to deploy. This means our products are very cost-effective for our customers to deploy and support.
Third is reliability. We do our own architectures and a very high level of integration to create what we believe are the most reliable products in the industry. Our design proficiency manifests itself in ProCurve products having the best and most comprehensive warranty in our industry. For most of our products, that translates to an unlimited lifetime warranty as long as the customer owns the product. If it ever fails, we replace it the very next day—period.
The fourth area we focus on is security. Security capabilities of the product, security of having the HP brand, but also security of network infrastructure—which is the primary method most people, whether they're hackers or your most-trusted user, would use to come into your company. Security is an integral part of a communications system, and we are investing to be the best long-term provider of security as part of a network infrastructure, specifically through our comprehensive ProCurve ProActive Defense security vision and strategy.
The fifth area of focus is open standards. We concentrate on interoperability. In fairness, there is no end-to-end ProCurve network in the world. In fact, some of our competitors actually tout the fact that they sell end-to-end solutions and will support applications on your network only if everything in your network is their product. We think that mentality is crazy. In our minds, that is not a long-term beneficial position for the market or for customers. We design products that play well with every other vendor's solutions, so customers have choice and can choose the best products year after year.
We believe it's our strength on each of those five variables that have made us so successful.
hpNOW: Can you talk a bit about customers' strong loyalty to ProCurve products?
McHugh: I think it's the reliability and ease-of-use of our products that have contributed to the strong loyalty we've achieved. In terms of ease-of-use, we hear a lot of comments such as, "We took it out of the box, we plugged it in and we were stunned at how quickly we were up and running."
Let me give you a real-world example of our products' reliability. I was visiting a customer a while back—a school district here in Sacramento—and I asked so see where our products were physically mounted. We went to a part of the school that was remodeled about three years earlier. It turns out that they simply walled over where the ProCurve products were mounted—completely plastered over the entire enclosure!
The school administrator looked at me and he said, "You know, that's a perfect definition of why we do business with you. Three years ago, somebody sealed these products into a wall and we never thought twice about it. We've been able to manage them just fine and they continue to work perfectly. We never need to do anything with it other than configure and manage it."
It's our product completeness and our no-excuses robustness that customers want from us.
hpNOW: Has this loyalty benefited HP in other areas as well?
McHugh: That's a topic that has been of unique focus for me. I think after working in and around this business for almost the entire history of advanced networking solutions, what I've taken away is that HP, as a whole, can benefit by having a strong networking business. However, ProCurve cannot have a strong networking business simply because we're HP.
Another way to think about that is this: DEC, IBM, Compaq and Intel were in the networking space, but all of those companies failed where HP is successful. I think the turning point for HP was when we decided to stop selling networking as an accessory to a bigger IT solution sale and started selling networking as a competitive open-market networking player.
When we made that decision, we started building a company that now is credible in the open market. It has great momentum and is very successful. I think that can now be beneficial to HP in a number of ways.
hpNOW: What are the long-term goals for ProCurve?
McHugh: I think our strategic mission is to be renowned for providing advanced, secure, easy-to-use, reliable networking solutions. We need to be widely known. We've struggled with that some, being a business unit within HP as opposed to most of our competitors, who are widely known but have much less market share and much less market presence than us.
| I think the success parameter for this business in achieving everything that it can in the open market is around our value proposition, but customers need to know about us for us to be considered.
We want to be the No. 1 alternative to Cisco. Cisco's the gorilla in this market space because of their size and the fact that they haven't had many missteps in terms of delivery to customers in the last eight years. And as a result, in a market where credibility, competence and reputation mean so much, it is a gold-plated standard.
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Security is an integral part of a communications system, and we are investing to be the best long-term provider of security as part of a network infrastructure, specifically through our comprehensive ProCurve ProActive Defense. |
ProCurve can't continue simply by attacking the small players, many of whom have had missteps and who have alienated their customers. We've definitely benefited from those missteps, but there isn't much market share left in the companies we have passed.
hpNOW: ProCurve's underlying philosophy is to "think like a networking company." What does this mean?
McHugh: The reason we've chosen this business model was around the uniqueness of the customer and the uniqueness of the go-to-market strategy. Remember, IBM had a very large networking business and could not make it effective or relevant. In 1998, if you look at who the leaders were in providing networking solutions, it was all networking companies.
That's obviously not changed, with the exception of HP, because ProCurve is set up with a singular focus and was given the most important elements of this business model. We really had to act as if we were our own company that could focus on development, customer support and sales.
By being able to get after the things that were required of us—from a competitive standpoint and from a customer focus standpoint—ProCurve has gone from being 11th in the networking space to No. 2 in just a handful of years.
In some ways, it feels like an old HP division. But, in fairness, in other ways it's very different. Even going back 30 years, there was mostly a unified sales force for the major sectors. Yet, this market segment requires its own go-to-market strategy and specialized customer engagement model.
My management team has worked hard to instill a philosophy in the workforce to think like a half-a-billion-dollar business rather than an $80-plus billion company, because I think sometimes you make mistakes when you make assumptions about having all these vast resources available to you and you don't think about the business in terms of what can be afforded and what should be prioritized.
hpNOW: What are some key initiatives for ProCurve moving forward?
McHugh: Probably the biggest single investment that HP has made in this networking space was the release of new products this spring, the Switch 5400 and 3500. (See related press release)
They were based on a silicon development called the ProVision™ ASIC, which was a $50 million investment by ProCurve. This represents one of—if not the—strongest network architecture in the industry right now. The products have been met with wide industry success. In fact, we've been blowing through our forecasts on those products since they were introduced.
Since their release, we have also significantly enhanced our mobility solutions, refreshing our entire mobility line and adding some powerful solutions. We are now the only networking company that allows customers to manage all of their network ports through a single management tool whether they are light Access Points, stand-alone Access Points or hard-wired ports.
Just last month we refreshed our entire value line of products, introducing our first Web-managed solutions and completing an overhaul of our hardware products from top to bottom over the past year.
In addition, early next year we will introduce exciting new extensions to our security offerings. We'll be going from access management and virus throttling to things such as network immunity and more advanced firewall and intrusion detection. In this business, you have to always be looking forward to see where customers' priorities will be.
hpNOW: Any closing thoughts?
McHugh: The last comment I'd make is that some people looking at the ProCurve business model and go-to-market strategy could be easily confused and think they're seeing something that did not benefit from the HP heritage. I'd say that there's nothing further from the truth. In fact, if you think of what our customers are looking for and what our value proposition is, I think it's as true to the HP heritage as any business inside of HP.
There is no question that when we're engaging with customers and talking about what ProCurve is capable of, the fact that we happen to be from HP is a very important factor in customers feeling comfortable about doing business with ProCurve.
The uniqueness of the go-to-market and business model is based on the fact that customers also demand that we be a credible, complete, no-excuses networking provider. That's really what we set out to do five years ago when we set up the ProCurve business this way. It's about meeting open-market competitive standards for a networking business.
I really think that is at the heart of what HP's all about—in terms of offering advanced technology, being an innovator, being very focused on the customer and providing best-of-breed, reliable and robust products. I think it's those things that differentiate us from every other networking company.
Published Oct. 10, 2006.
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