HP-3Com merger marks end of Cisco dominance

BANGALORE, INDIA: US computer giant Hewlett-Packard today announced that it has agreed to buy networking company 3Com for $2.7 billion, a move it hopes will help it further expand in the growing Chinese market.

Praveen Bhadada, engagement manager, Zinnov Management Consulting Pvt. Ltd, an  advisory firm, says: "3Com’s acquisition by HP surely means that it’s the end of dominance of a single vendor – first real competition for Cisco literally."

HP 3Com coalition levels-up HP-Cisco rivalry

He further adds that while Cisco is going to try and keep its market share (currently 70 percent), HP is going to try even harder. Needless to say, in the price versus value game, the biggest winner will be the customer!

With this acquisition, HP clearly becomes the no. 2 networking vendor in the world. The acquisition of 3Com will dramatically expand HP’s Ethernet switching offerings, add routing solutions and significantly strengthen the company’s position in China – one of the world’s fastest-growing markets – via the H3C offerings.

Zinnov believes that it will augment HPs current offering of ProCurve, a $1 billion dollar global product. HP's networking products have done well in the US and Western Europe, but Asia and specifically China has been tougher for the vendor to crack. However, with this deal, all should be well.

HP delivers Converged Infra Architecture

Infact, the aspect that HP will gain 2,500 China-based engineers from 3Com is one of the most attractive aspects of the deal.

The China Story:

The advisory firm notes that the purchase of 3Com, has refocused on China as a key emerging geography since falling of the US market in the last 18-24 months. This deal has most definitely strengthened HP’s position in China, one of the world’s fastest growing markets and will give HP access to well-established sales staff/channels in China.

3Com currently has one million routers installed in China, half a million switches, and common management for the whole range of gear. China uses the H3C equipment to power eight out of 12 national backbones, including its transportation, education and energy networks. China had a $1 billion market for enterprise Ethernet switches last year.

The Chinese market is indeed a very big opportunity for any vendor. China had a $1 billion market for enterprise Ethernet switches last year.

Cisco took 49 percent of the market by revenue last year, while 3Com took about 28 percent through its former joint venture with Huawei. 

The India Story:

"India has been a fast growing market for networking and currently Cisco is the only dominant player. With HPs acquisition, the focus to tap the market opportunity is surely going to increase. HP currently has approximately 1,200 employees  working on R&D activities out of India and this could see a significant increase for the networking bit (security, storage switching etc.)," Bhadada adds .