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3Com Gives HP Core Networking — And Amps Up Cisco Competition

The Converged Infrastructure Market Heats Up

November 12, 2009

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  • By Ellen Daley
  • with Bradford J. Holmes,
  • Robert Whiteley III,
  • Chétina Muteba

Why Read This Brief

HP announced an agreement yesterday to acquire 3Com for about $2.7 billion. This deal is mostly about market — not product — acquisition. HP gets China (a strong growth market), a good enterprise switch, a solid security product, and a router portfolio. The networking assets give more power to HP's converged infrastructure — and data center — capabilities. This deal turns up the volume on the competition with Cisco. What happens next? HP continues to deepen its networking portfolio and broaden its data center capabilities — expect Brocade to be eaten up. Both Cisco and HP will continue buys, both need assets in the collaboration space, and HP needs to find a video response to Cisco's planned TANDBERG buy. Will Cisco go the other way and buy a services firm to compete with HP/EDS? Not yet. Cisco still has a run in high-growth markets and is not yet feeling the pinch that will force this — yet.

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