ProCurve expects 30% growth in Middle East profit this year
ProCurve – the networking division of HP – is expecting a 30 per cent growth in revenue in the Middle East despite the economic downturn that is hitting most of the region's economies.
This estimate, says Alberto Soto, Vice-President and General Manager, Emea is rather "conservative". And although there has been a slowdown in Dubai, where their regional headquarters is based, he said there are still plenty of opportunities in other countries.
"We see great potential in Saudi and Egypt. In Saudi, we could have gone faster in terms of investments but we don't regret what we did," he said adding the Kingdom has been less affected by the crisis.
ProCurve has ample reason to look forward to a steady growth. First of all, it is now integrated to HP's Technology Solutions Group, a privilege it did not enjoy during the time of Carleton S Fiorina, its former chief executive who also served on the board of Cisco Systems. Fiorina supported the traditional alliance between HP and Cisco, in which HP sold computers and Cisco sold network equipment to the same customers.
Now, under the leadership of Mark V Hurd, ProCurve has been grown into a mature business segment. Industry estimates show it is now HP's second-most-profitable business and one of its fastest-growing.
"We remain extremely profitable," Soto told Emirates Business. "People sometimes think that because we don't provide the numbers, we lose money and we are being subsided by the bigger HP. It's the opposite."
Secondly, profit is coming from a smaller base – eight per cent market share compared to 50 per cent by Cisco – hence there is a big room for growth. And third, its increasing alliance with a handful of big names in the industry and its continuous marketing efforts should take it to another higher level, added Soto.
HP ProCurve has integrated new vendors into its Open Network Ecosystem and also expanded into the datacentre network equipment market through the launch of new switches. Are you up to overtaking Cisco on the top spot?
You can say that is our final goal. Our aim today is to offer a competitive landscape. We have eight per cent market share, a clear number two position, while Cisco has 50 per cent. Our goal is to be viewed in the market as a clear alternative. We have everything to gain and very little to lose.
You're doing aggressive marketing plans when many others are cutting down on costs. How much growth rate are you looking at for this year?
We are re-evaluating plans right now because things in some countries are very challenging. The reality is that there is economic slowdown. But our plan is to grow 30 per cent within this year.
Right now we can sustain [growth] in emerging markets especially in the Middle East. Our growth in the region is 50-60 per cent so when we talk about 30 per cent growth in the Middle East, that is much more conservative than what we used to have. But in some emerging markets like Russia and Eastern Europe – they are having a very tough time with the credit crunch. The UK is also having a hard time. Some of the players in the market just don't have the cash. They don't have access to the funds to run the business in a smooth manner. The GCC is definitely growing above average and in Dubai – I understand the traffic is much better because of the slowdown – but the situation there compared to the situation in Russia is very healthy.
How big is ProCurve now in the HP portfolio?
We don't publish our results, they get absorbed in the bigger HP result but we remain extremely profitable for this company. One of the feedbacks we get is that because we don't provide the numbers people think that we lose money and we are being subsided by the bigger HP. It's completely the opposite. HP wouldn't allow a business that is losing.
What kind of opportunities are you looking at pursuing? Is acquisition in the pipeline?
We have all options open. We have an organic plan and we are trying to bring some future investments forward.
Have you got the cash to buy more assets in case an opportunity shows up?
HP has a balance sheet that is completely public, and it is a cash-rich company. The problem in this thing though is to find value. It's the amount of value that you can bring with any potential company in the market.
What are your plans in the Middle East?
We have already made quite a number of investments in terms of resource deployment. Through our office in Dubai, you can reach a number of countries, so we are taking advantage of that. We've got offices everywhere in the Middle East. We see great potential in Saudi and Egypt. HP is a company that is no more into a 100-metre race, we are much more into a marathon. In Saudi, we could have gone faster in terms of investments but we don't regret what we did. Probably we could have done it but eventually we will come down to the opportunity there. What I see in Saudi are huge projects that tell we need to be there. We have resources in Jeddah, Damman and Riyadh. We are trying to consolidate some resources in Riyadh and we are also trying to identify people who fit the profile. There is a bit motion in the country right now, trying to identify the right profile. We are beginning to see a slowdown there, not the phase that we expected so we are taking a much more conservative stance in terms of investments.
Also you have to keep in mind that we are not thousands of people, so we really need to find good people who can help us.
PROFILE: Albert Soto Vice-President and General Manager Emea for HP ProCurve
Soto is responsible for the overall management of the HP ProCurve business in Emea and for maximising revenue growth in the region. He oversees all HP ProCurve go-to-market elements, including sales, operational supply chain, marketing, product portfolio planning, service and support, and finance. Prior to this position, Soto was HP ProCurve's Sales Manager Emea – responsible for co-ordinating and driving all sales functions and managing the HP ProCurve sales force and sales quotas for the country management teams across Emea.
He joined HP in 2005 from 3Com, where he held various international positions. Prior to his time at 3Com, he held positions as country manager for Spain for Madge Networks, and sales and marketing roles at Digital Equipment Corporation and Bull.
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