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HP-3Com acquisition hits Cisco the one place it hurts

The gloves are off in the Cisco-HP battle. HP’s move to acquire 3Com hits Cisco in one of the few places it really hurts – China.

3Com controls 32% of the Chinese networking market (with $700 million in revenue) and has held Cisco at a dead heat there – something no other networking company has been able to do in other markets. If the acquisition goes through, HP would have a tighter grasp on that market – and a more complete portfolio with which to battle Cisco globally.

“I think this is 75% about geographic market acquisition (in China in particular) and 25% about product acquisition,” said Robert Whiteley, a Forrester Research director.

On the technology front, HP’s ProCurve chief Marius Haas said the acquisition would give HP an “edge-to-data-center core” portfolio and he promised barely any overlap between the two product lines.

That, in fact, won’t likely be the case since both have extensive and similar switching lines.

A more likely scenario is that HP – which has the most successful edge switch in terms of sales – will scrap its own core switching line, replacing it with 3Com’s H3C product.

“ProCurve built its own core switch a few years back, but it wasn’t gaining a lot of traction. With 3Com they get a much more scalable switch that is a better fit for high-end datacenter and cloud networking initiatives,” Whiteley said.

3Com will also bring a router story to the table.

“ProCurve never really had routers, so the H3C assets will help here again. I don’t think this is as big a deal, since the majority of enterprise refresh is on L3 switches, which are more relevant in the datacenter, and where Cisco doesn’t have quite the stranglehold it does on router,” Whiteley said.

The companies would not say Wednesday which, if either, of the ProCurve or 3Com H3C labels would be shuttered. Either way, the core and edge networking components would obviously be coupled with HP’s data center servers, giving Cisco a run for its money on that front too.

The two companies also swung at Juniper Networks, which consistently sells its components on being more economically efficient in operating costs because they run on one joint operating system – JUNOS. 3Com’s components were also engineered in-house and therefore share one operating system, said 3Com President and COO Ron Sege said, adding that the motto on the OS is, “Learn once and support many.”

In the same breath, Sege also promised that 3Com and HP together would provide networking equipment that wouldn’t be proprietary like Cisco’s causing vendor lock-in. It’s difficult, however, to sell a portfolio on having a joint OS if users aren’t being asked to buy into a one-vendor system.

3Com also brings its Tipping Point security line to the table, which brings HP in line with Cisco and Juniper on that front.

The acquisition is pending regulatory review.

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