Cisco and HP turf war hits switching ASPs

"Heavy competition" between arch rivals prevents Ethernet switch sales from growing in second quarter

The savage turf war between Cisco and HP has taken its toll on average selling prices (ASPs) in the networking market, according to Infonetics Research.

While Ethernet switch port shipments rose a healthy 11 per cent annually in Q2, revenue dropped three per cent to $4.4bn (£2.8bn) as "heavy competition" between the duo drove down prices.

HP Networking has made no secret of its desire to undercut its larger rival, in April launching a European trade-in programme targeting Cisco's Catalyst install base.

On a sequential basis, Q2 Ethernet switch revenue was up six per cent and port shipments rose eight per cent, the market watcher said.

Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics, said Cisco and HP's arm wrestle had put Ethernet switch buyers in the driver's seat.

"While the battle is mostly playing out between Cisco and HP, other vendors are caught in the crossfire, with declining ASPs being one side effect," he said.

"In the switch market, we expect this to result in stagnating revenue despite robust demand in 2011."

Cisco's router share is down three points from a year ago, while HP is up by more than two points, Infonetics added.

There were some bright spots within the switching market in Q2, with 10G revenue growing 19 per cent sequentially and 58 per cent year on year.

Meanwhile, enterprise router sales grew six per cent sequentially to $843m, with unit shipments growing 11 per cent.