Roundup: Analysis of HP-3Com Deal

Larry Dignan at ZDNet reflects on the growing rivalry between Cisco and HP to grab mindshare and market share in converged networking for the data center. "At the Gartner CIO powwow last month, HP CEO Mark Hurd argued that the data center winner will be able to offer a complete portfolio of hardware, software and services. 'You can’t do any part of the stack as a hobby,' said Hurd."

As Cisco and HP compete hard for customers, Tim Fitzgerald predicts that "partners are likely to be caught in the cross-fire. Solution providers say this is personal for both HP CEO Mark Hurd and Cisco CEO John Chambers. And its personal for HP and Cisco's direct sales reps working with partners on account strategy and planning. That means partners that refuse to choose to line up 100 percent behind one or the other are going to face recrimination and payback in the form of favored or unfavored treatment."

In a somewhat unusual move, Cisco issued a statement offering comments on the HP-3Dom deal, stating that "acquisitions in our industry only validate the fact that networking is becoming the platform for all forms of communications and IT."

Sramana Mitra notes the strategic importance of the Asian market as a driver in the deal. "3Com’s China cost-structure has got to be the biggest driver, making it attractive for HP to hit Cisco where it really hurts. HP’s global channel will give 3Com’s products an excellent reach into the heart of enterprise and SME networks, as companies look to reduce total cost of ownership across the board."

Some viewed the HP-3Com deal in terms of what it means for other potential acquisitions. Shares of Brocade Communications (BRCD), which was rumored to be in play, fell in after-market trading as traders perceived a sale as less likely now.