HP-3Com Marriage a Boon for Partners?By Ericka Chickowski | Posted 2009-11-12 Email Print
In a late-day conference call yesterday, HP and 3Com executives further detailed the particulars regarding HP’s landmark $2.7 billion acquisition of 30-year-old 3Com.
Partners on both sides of the HP-3Com fence ruminating over how HP’s massive $2.7 billion acquisition of 3Com will affect their respective plays within the networking market needn’t worry too much—in fact, they should be excited over the possibilities for greater customer choice, according to executives with both companies who explained the motivations and value propositions behind the deal yesterday.
In a late-afternoon conference call, Marius Haas, HP vice president of ProCurve, and Ron Sege, president and COO of 3Com, outlined the factors that laid the foundation for a union that marks a new era in the mounting rivalry between HP and Cisco. The biggest keys were the companies’ underlying philosophies about open architectures in networking, combined with their complementary product portfolios and geographical market penetration, Haas and Sege said.
"It’s about bringing open standards, it’s about bringing interoperability, it’s about bringing flexibility, it’s about bringing dramatically better price performance and lowest total cost of ownership (to the market)," Sege said of the deal. "As I go around and talk to customers, the thing I hear more than anything else is 'Boy, we just feel like we're paying too much for networking and getting too little.' And part of that is because there hasn't been true choice in the industry."
Haas says the move to pick up 3Com fits in well with HP’s evolving ProCurve strategy and accelerates HP’s plans to react to growing demand from customers who like what they’ve seen thus far out of HP’s networking team and want to see end-to-end product choices, particularly those that scale well in enterprise environments..
"ProCuve has done a phenomenal job building out a network edge strategy and a phenomenal job going after the midmarket," Haas said. "What was happening was large enterprises were saying 'I want that value proposition and that portfolio for my environment. And guess what? I want you to build this, this, this and that as part of that ecosystem as well.’"
According to Haas, "the 'this, this, this and that’ was just what we got here" with 3Com. He says that when surveying the offerings served up by ProCurve and those offered by 3Com’s young line of H3C data center offerings and mature Tipping Point intrusion detection products, there is actually very little overlap in the portfolios.
The combined offerings are just the arsenal HP wants to go after Cisco, which Haas says has pushed customers around too long.
"There is a player out there in the market that is trying to force a forklift upgrade in the market and the customers are saying 'I will not sign up for yet another 10 years of a proprietary stack and pay too much for it and pay too much maintenance for it over the period that I have it. I want a flexible architecture, I want to deploy when I need it where I need it, and in order to be able to do it, I’ve got to be able to do it with a heterogeneous architecture model in mind,’" Haas said. "So, that's what we've always built our business on."
Of course, HP (and 3Com, for that matter) is hardly a scrappy upstart in the IT community. Which raises the obvious question of how much choice a marriage between two such giants will actually afford the market. Is this really going to be just the crowbar that channel partners and customers were looking for to bust open the networking market? Or will it just be another step along the path to getting locked into one brand or the other across the entire IT environment?
Haas is betting on the former, due to one critical consideration: both HP and 3Com have emphasized open architectures and shied away from proprietary systems.
"If it is part of your strategy to deliver a completely proprietary architecture model, yes, you’re locking someone in," Haas said. "(But) if, by default, you bake your architecture on a standards based model, which is what we at HP have done across all of our different infrastructure solutions and what 3Com has done within their platform, it allows customers to plug and play different pieces of the architecture together so by design and by default we have not locked in anybody. So it gives ultimate flexibility, the customer makes the choice."
According to both Haas and Sege, the companies have already put together an integration team together to work on meshing the product portfolio, sales channels and branding between the two companies while regulators review the deal before it closes mid-2010. Haas says HP still hasn’t decided whether ProCurve will remain branded separately from 3Com’s line of products.
"We're going through an extensive brand analysis as we speak, we'll start that and finish that as part of the integration process," he said. "We'll be communicating that when we're ready."
And as for partners, Haas made it clear that HP plans on moving aggressively on the enterprise networking space once the deal closes, which will inevitably mean even stronger channel support.
"For starters, if you look at the total addressable market that's out there (it’s) $40 billion and we can specifically go after $30 billion right now with everything that we've got (through the merger)," he said. "We are underserved from a coverage standpoint, so the partners we have, the partners we want to keep, are the partners we want to invest in. Those are the partners that have invested in us and that's the philosophy we're going to take."
3Com partners will also benefit from deeper pockets from HP, and a broader offering to pitch to clients.
"From my perspective, the number one objective is to gain marketshare and serve more customers," Sege said. "Our partners are going to be beneficiaries from that. We'll be taking the steps necessary to support them. This is going to be good for 3Com's partners, I’m certain of it."