While there has been speculation in the last few months about the intentions of Cisco with respect to EMC and VMWare, the interesting news has come from HP with its acquisition of 3Com.
Unsurprisingly, Ovum believes this steps up the level of competition between HP and Cisco.
While it may not be as confrontational as, say, SAP v Oracle (Retek in particular), the implications could potentially be far-reaching. HP had already started to encroach upon Cisco’s market with its Procurve product line, but the acquisition of 3Com provides a serious boost to its data center credentials.
The acquisition of 3Com opens up a cross-pollination opportunity for the two companies as well. While 3Com has had difficulty entering, and staying within the North American market, it will likely be able to leverage HP’s strong presence as a more direct way into accounts.
HP will be keen to offer the extended network capabilities and products of 3Com among its existing customer base in an effort to increase its share of wallet.
Conversely, 3Com’s strong position in the Chinese market will be a critical element of HP’s acquisition decision. HP will hope to leverage 3Com’s market presence to align its own technology offerings – in particular, data center technology.
3Com also has good engagements with key industries, including energy, transportation, and education at an enterprise level. These will be attractive industries for HP in China given their increasing level of government funding.
One aspect to watch will be Cisco’s response, and while they acknowledged HP’s move as a verification of their network-centric strategy, there will no doubt be a few murmurs internally.
Cisco is currently holding around $4.7 billion in cash and equivalents on its balance sheet although this figure has dropped in recent quarters. It does afford the company the opportunity to make an acquisition, although Ovum does not expect anything immediately.
The logical choice would be EMC, and as such market rumors continue to abound.
Regardless, Ovum expects the competition between HP and the network-dominant Cisco to continue to intensify, particularly as network-centric technology solutions such as cloud computing continue to emerge.
Adam Jura is a senior analyst based in Sydney