What will Hewlett-Packard buy next?

Assuming Hewlett-Packard Co.’s purchase of 3Com Corp. goes through, that would make it the world’s most diversified IT manufacturers: PCs, laptops, servers, storage and a deep lineup of network gear. What will it do next?

Well, HP isn’t deep in unified communications or videoconferencing products. If HP and Cisco Systems Inc. are locked in a pas de deux, one might look at the two moves Cisco made this year for a clue: The first was itsUnified Computing System (UCS) strategy to offer a server/storage/networking platform. The second was its recent bid for midrange videoconferencing systems manufacturer Tandberg SA.

HP seems to have responded to Cisco’s data centre thrust (although some industry analysts think the 3Com deal is more about getting market share in China than hardware). With some US$9 billion in cash and equivalents left after the 3Com deal closes, will HP now turn to unified communications?

I put the question to Andrew Davis, senior partner at Wainhouse Research, a Brookline, Mass., research firm.

“The question is, is HP serious about the product side of the market or not?,” he answered. “They certainly have a valuable and aggressive plan to go after the services side with their managed services. If you step back and look at HP, IBM, Cisco and Microsoft, these companies seem to be increasingly getting into each other’s space, although Microsoft is almost exclusively focused on software and in my opinion that is where they will stay.

“But if you’re asking will HP buy Avaya or Polycom or someone, they need to decide whether they want to go head to head with Cisco, or will they back away from the hardware side of the business and focus on services.”

Despite the hoopla around videoconferencing, he believes there’s a higher probability HP will buy a supplier of unified communications and PBX infrastructure offerings – say, Siemens Enterprise Communications GmbH & Co.[ now in the hands of U.S. private equity firm Gores Group] , Avaya Inc. or Shoretel Inc. – rather than a videoconferencing vendor like Polycom Inc. For one thing, he said, video isn’t mainstream in enterprises today. For another, video has certain complexities right now that might dissuade HP from getting involved.

There’s also an argument that in the long term videoconferencing solutions will be PC/software based, he added, so there’s less of a need to buy a hardware-based videoconferencing vendor.

HP and Microsoft recently expanded their unified communications alliance, which is based on Microsoft software – Office Communications Server, SharePoint Server and Exchange Server. At the same time Microsoft and Cisco – which also has its own PBX – partner on UC.

But these days, Davis noted, increasingly companies that were partners are now competitors. Avaya and Microsoft, for example.

But HP doesn’t have a telephony application of its own, so it could be comfortable letting Microsoft do all the software – unless it wants more. Davis pointed out that many companies tell him they are a Microsoft shop or an IBM shop. No one has ever told him it is an HP shop.

“People have to pick their battles,” Davis concluded. “It’s hard for me to believe that all four of these players – Microsoft, HP, Cisco and IBM – will be duking it out for the same market.”



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