Gary Barnett's Blog

HP and 3Com Corporation have announced that HP is going to acquire 3Com at a price of $7.90 per share in cash (valuing 3Com at $2.7 billion).

In a nutshell:

• Of course this move means HP’s competitive position against Cisco is improved significantly
• And yes, Cisco’s postion vs HP is improved by their alliance with EMC
• I think this will be good for Cisco, HP, and end-user organisations
• Will Cisco buy a services company in the next 12 months? Hmm
• There is evidence that we all have a LOT to learn about selling networking stuff
• Some strong commentary from a proper Cisco watcher..

Of course this move means HP’s competitive position against Cisco is improved significantly
Duh. HP has already signalled a clear goal to compete with Cisco in networking with the Procurve product line, the 3Com deal makes HP’s offering wholly credible at pretty much every scale. Interesting to note the emphasis placed in the announcement on the fact that 3Com’s kit is “modern” – the implicit implication being that Cisco’s is old – but I don’t think the “my asic is faster than yours” drag-race has a long term future.

And yes, Cisco’s postion vs HP is improved by their alliance with EMC
The EMC alliance is pretty good news for Cisco – bolstering Cisco’s datacentre play significantly – bringing storage, management, and virtualisation technology to the Cisco offering.

I think this will be good for Cisco, HP, and end-user organisations
Oddly enough the the two “combined” offerings have a lot in common:

• HP has management tools, Cisco gets them from EMC
• HP doesn’t have virtualization technology to match EMC’s
• HP strengthens it’s networking offering (esp in Security, and large scale switching) making it comparable to Cisco
• HP has storage, Cisco gets this from EMC
• HP has it’s own server tech, Cisco would be mad to enter this market anyway
• HP has a strong x86 server story, Cisco has an emerging (but exciting) x86 server story

For me, this looks good for end-user organisations, in that it means that they’ll have more choice – Choice = competition, and competition leads to innovation – good for all concerned.

The gorilla in the boardroom is HP’s services capability – the combination of HP and EDS is extremely powerful, making HP Services the second biggest in the world. Cisco doesn’t have that kind of services capability…

Will Cisco buy a services company in the next 12 months? Hmm
I can see the appeal – but who would they buy? I think Cisco would be well advised to focus on being a partner to the likes of IBM (assuming the EMC deal doesn’t upset big blue too much) and the other services co’s in the market place, rather than going out shopping for a services arm.

There is evidence that we all have a LOT to learn about selling networking stuff
I was interested to see the extent to which early comments on the HP/3Com deal seemed to focus on individual products and their relative bits and bytes – It would seem that networking is where server h/w was a decade ago – with lots of obsession component feeds and speeds rather than the overall outcome.

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