HP to Acquire 3Com for $2.7B, Upping Ante Against Cisco

By Jessica Davis  |  Print this article Print

HP says its $2.7 billion acquisition of 3Com will create a networking industry powerhouse and give customers and VARs a choice in a networking space that has been dominated by a single vendor. HP's move ups the ante in its growing rivalry with Cisco. Both HP and Cisco have tread in each other's technology territories in their efforts to create converged data center solutions that include networking, servers and storage.

Looking to create a "networking industry powerhouse" and up the ante in its growing rivalry with Cisco, Hewlett-Packard (NYSE:HPQ) has announced it will acquire networking vendor 3Com (NASDAQ: COMS) in a stock deal estimated to be worth about $2.7 billion.

HP says the acquisition of 3Com, a provider of network switching, routing and security solutions, will add to HP’s next-generation data center strategy. Both HP and Cisco have created converged solutions that include networking, servers and storage, as well as simplified management to help ease the data center management burden and increase efficiency.

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It’s part of a larger move among several big technology vendors to create a set of solutions that are designed to work together rather than leaving customers and reseller solution provider channel partners to assemble their own best-of-breed solutions that can add complexity to data center design and deployment

Last week Cisco announced its Vblock architecture and channel program, a set of reference designs and a go-to-market strategy to help partners sell and deploy Cisco data center converged architecture into companies. In a direct shot against the networking giant, HP executive Dave Donatelli says customers are looking for another choice.

"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," says Donatelli, executive vice president and general manager of Enterprise Servers and Networking at HP, in a prepared statement. "By acquiring 3Com, we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry.

What does that mean for HP’s own ProCurve line of networking products?

"By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center," Donatelli adds.

The companies say that HP’s acquisition of 3Com will expand HP’s Ethernet switching offerings, add routing solutions and strengthen the company’s position in China via the H3C offerings.

HP says it will retain 3Com’s networking research and development team in China.
The 3Com acquisition also provides HP with network security capabilities via 3Com’s TippingPoint portfolio.

The boards of both HP and 3Com have already approved the merger agreement. The acquisition is subject to customary closing conditions, including the receipt of domestic and foreign regulatory approvals and the approval of 3Com’s stockholders, and is expected to close in the first half of 2010.

HP anticipates that the transaction will be slightly dilutive to fiscal 2010 non-GAAP earnings.

Jessica Davis covers the channel for eWeek and Channel Insider. Her technology journalism career began well before anyone heard of the World Wide Web and has included stints at Infoworld, Electronic News/EDN, and the Philadelphia Business Journal. Her work has also appeared on CNN and Forbes.com. She has covered hardware, software and networking, as well as the business side of technology. She has won several journalism awards, including a national ASBPE award for best staff-written column, and was named Marketing Computers hardest working tech journalist on their inaugural list of top tech journalists. Jessica can be reached at jessica.davis@ziffdavisenterprise.com

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