Some time ago, HPE announced it was partnering with Arista Networks for data center switches. Recently I was reviewing HPE’s product portfolio and saw this graphic, which shows that Arista represents a substantial part of HPE’s data center offerings.
The sale of H3C assets to Tsinghua in China made sense. Unlike other US technology companies, HPE is uniquely well positioned to sell products in China through a number of joint ventures, so selling the Comware portfolio to a local Chinese company suits the unique market there.
At the same time, the US government and American companies have been clear that buying Chinese networking products is a problem for them. In my view, this is why HPE continued to develop and sell the Procurve/Aruba product family–to keep a locally developed product for those companies (in addition to fulfilling existing long-term, multi-decade contracts).
The Arista partnership extends this strategy, as Arista is on the DOD Approved Products list. Offering Arista products to US markets is a good move.
This type of specialized partnership was common just a few years ago when vendors sold into silos of servers, storage, and networking. HPE brought its 3Com/Comware portfolio to customers as part of growing its share of the market.
But things have changed. Now Cisco sells UCS servers, Dell has networking & storage portfolios, and IBM walked away from hardware.
Arista Networks has been growing rapidly. I see that it has good enterprise adoption after early breakthroughs in HFT and financial markets, but it’s hard work to build a sales teams to knock on customer doors that usually only open for Cisco salespeople.
I’ve rarely heard engineers criticize Arista’s products or support. From a operational perspective, the company is well liked and people actively highlight their satisfaction with Arista compared to other vendors.
Will HPE Buy Arista?
It’s possible but doubtful.
- HPE still partners with Cisco for a lot of networking gear. Buying Arista may trigger a reaction from Cisco to remove discounts, status, or even complete severance.
- Cisco’s legal battle with Arista isn’t going anywhere fast and may be playing in Cisco’s favor here. HPE already has a lot going on, so it wouldn’t be smart to take on a court case that appears to be fueled by personal dispute and executive egos. It makes sense to wait this out.
- Arista is very highly priced because it gets good sales from mega-scale data center customers. If this changes, Arista’s price would weaken quickly and open the door to acquisition. That’s a big maybe, though.
- HPE has a lot going on with divesting business units and buying new ones. In the overall picture, networking products don’t really make a difference to HPE’s revenue or profits.
I doubt that Arista would use HPE to sell products to MSDC companies, particularly Microsoft Azure. But then Microsoft procurement is an arcane and irrational beast.
The EtherealMind View
I don’t see much downside for enterprise customers in this partnership.
- HPE needs a data center portfolio to complement what it resells from Cisco when it’s competing head-to-head.
- If the HPE/Arista partnership dissolves, customers can always do business with Arista directly.
- I understand that Arista products are quite a bit cheaper than Cisco, and roughly on par with Comware gear. So its less painful to rip/replace if that was necessary (which is unlikely).