HP buying 3Com is all about Cisco and I will tell you why
When I asked Cisco CEO John Chambers about HP in reference to its introduction of Unified Computing System earlier this year his said “the gloves are off.”
Chambers is one of the most diplomatic leaders in the industry and not too much phases him but I got the sense that whatever happened between HP and Cisco had gotten personal for some reason.
Today's blockbuster announcement that HP has acquired 3Com means the fight has gone from the boardroom to the alley. Statements from Dave Donatelli, executive vice president and general manager, Enterprise Servers and Networking, at HP, that “Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor,” should be disregarded. What Donatelli is telling the market is: Lookout Cisco we are coming for your throat. The statement, prepared or otherwise, could have been from Mark Hurd himself for what it mattered. The message this deal sends is very clear that HP and Cisco will fight to the death if they have to.
Cisco maybe the leader in networking, but this deal could expose some of its shortcomings. At last count 3Com has 107,000 reseller partners. That's a lot of coverage. You can debate if all these partners are quality partners and certainly the vast majority aren't, but that's still an impressive number and now they will be HP partners and not Cisco partners.  Cisco is still trying to build up its partner base especially in the SMB.
Another thing to consider is this: 3Com equipment works and it works well. Sure they may not be the best. Cisco has that title sewn up, but it may not matter. The channel likes to offer alternatives to customers. Now that HP has 3Com they no longer have the tough sell of saying: “Dear Mr. Customer you can have Cisco or you can have 3Com.” The choice is now a Cisco solution over an HP solution and customers will be more comfortable considering HP as an alternative than 3Com.

Patrick Power, VP of solution Provider Nitro Microsystems said: “Its clear that HP is very serious about its competition with Cisco, and is poised to do great things as the only major full solutions company that crosses virtually all key areas of IT now including networking. From a 3Com perspective, they have had trouble, particularly in Canada in staying entrenched in the market over the years. They have always had great products, particularly in the SMB space, and this breathes new life into their ability to deliver real and long term value now to their customers.”

Drue Reeves, vice-president of data centre research at Burton Group, noted there are now two companies that can seriously challenge Cisco: A merged HP-3Com, and Brocade Communications Systems, which bought Foundry Network last year for US$3billion. As a result, customers could see more competition and better choice of products.

“It really puts pressure on Cisco if HP can become a bigger competitor, because now they can get their servers and their storage and their networking from one play,” he said. “Cisco, even with UCS [its recently-announced Unified Computing System] is still missing a little bit of that storage piece. That’s why they did [last week’s] partnership with EMC and VMware. But even with UCS, they don’t have the product depth and breadth in server-land that HP does. So it’s kind of a race to see who shores up their product portfolio first – will HP shore up its networking portfolio first, or will Cisco have more servers to challenge HP?”

 3Com has been a troubled company for about decade. They made plenty of mistakes such as abandoning the enterprise market, the flip-flopping with Huawei Technologies in China and leaving the North American market. But, they have been rescued in a sense by HP and it should be interesting how it plays out in the market place for the channel.
Two quick hits before I go. Sheryl Steinberg formerly of Lexmark Canada has joined Dave Wireless. CDN wishes her well.
Hilary Bassett, a PR practitioner who handled Sun, SAP, and Symantec has moved to Temple Scott & Associates and will rep Xwave. CDN wishes her the best of luck.

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