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HP, 3Com deal not without product overlap headaches

November 12, 2009 05:57 PM ET

Network World - HP and 3Com fit remarkably well together when considering the target markets that drove them together in this week's blockbuster $2.7 billion deal: core Ethernet switching and China. But most of the rest – low-end, SMB and edge switching, plus wireless networking – faces considerable overlap.

Fortunately for HP, the overlap should be a minor distraction to what the company views as the real big game: next-generation data centers, where unified switching fabrics, virtualization and consolidated compute/storage and networking operations will drive spending into the next decade.

With the 3Com buy, HP inherits the S 12500 and S 5800 data center core and aggregation switches. Up to now, HP could not address high-density aggregation and core switching applications in data centers.

3Com also brings enterprise edge and core routing to HP.

"It gives us an edge-to-core [story] that we didn't have before," says Marius Haas, senior vice president and general manager of HP's ProCurve Networking business.

Once the 3Com deal closes next year, HP will own scores of next generation data centers in China, where HP operations are already strong – the company just posted a fourth quarter hike in revenue and profit thanks largely to business in China. HP will then set its sights globally to fend off Cisco and its Unified Computing System (UCS), which threatens to encroach on HP's blade server turf. It is this, plus 2,400 networking engineers in China that drove the marriage with 3Com.

"HP will be building a credible alternative to UCS, which is where a lot of the action is in data centers right now," says Rob Whiteley of Forrester Research. "The gloves are off and these two will make great competitors in the long run."

Do HP, 3Com value claims trump Cisco? 

HP and 3Com personnel further from the data center action have to be quivering though. Both companies are hallmarks in low-end and SMB networking where product rationalization will be most significant.

HP's low-end Ethernet switch line-up is virtually identical to 3Com's: a variable mix of stackable and standalone fixed-configuration and modular Layer 2 and Layer 3 10/100/1000/10000Mbps Ethernet managed and unmanaged, PoE and non-PoE switches for practically any edge or campus application. Both companies have been competing fiercely in this market based on low price, simple features, ease-of-use and lifetime warranties.

HP will have to base its rationalization decisions on which product line is newer and more feature-laden, analysts say."Whoever has newer/faster/better/more will get the nod," says Steve Schuchart of Current Analysis.

That will be a tall task given the rapid pace of enhancements and extensions HP and 3Com have been unveiling on their low-end switches over the last several years, such as Gigabit Ethernet and POE Plus.


Originally published on www.networkworld.com. Click here to read the original story.

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