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HP to buy 3Com in networking, data center bid

Stephen Lawson | Nov. 12, 2009
The deal will bring more Ethernet strength to HP's broad enterprise lineup

3Com's strongest market is China, where it holds about 30 percent of the networking market, HP executives said. HP already has a strong business in China itself but plans to use 3Com's assets to gain market share there and to develop new products, they said.

China is a high-growth market where 3Com has been "going gangbusters," Schuchart of Current Analysis said. The R&D team is also a key asset, he said. "They have some serious networking R&D people," Schuchart said.

And 3Com's TippingPoint business will give HP security products it either had to partner to obtain or could not offer customers at all, Schuchart said.

"This is huge for HP. It gives them legitimate network security," he says.

HP also gets a VoIP (voice over IP) product line in the 3Com NBX and VCX IP PBX and handset lines. 3Com has less than 0.5 percent share of the total $16 billion enterprise telephony market, according to Dell'Oro Group. But that's still more than the zero share HP has, which up to now addressed the market through partnerships with Avaya and Microsoft, among others.

There will also be considerable overlap in wireless LANs, Schuchart said. 3Com has an OEM arrangement with Trapeze Networks, but HP bought Colubris a couple of years ago. HP is expected to continue on with the Colubris product line.

The deal also is in line with a trend among large technology companies to become vertically integrated suppliers, Illuminata's Haff said. The story here isn't the rise of a new Cisco, but really, this is part of this reintegration of the big systems company, he said.

He cites Oracle's proposed acquisition of Sun and the Cisco, EMC and VMware deal as other examples of this trend. It's a bit different in every case, but we do have this movement toward vertically integrated companies, Haff said.

Nancy Gohring of the IDG News Service and Jim Duffy of Network World contributed to this story.


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