For $2.7 billion, Hewlett-Packard (HP) agreed to acquire 3Com Corporation — an IT networking vendor most noted for its routers, switches and security products. The announcement came at a public press conference held at 5:00 p.m. EST, November 11. HP expects to close on the deal in the first half of 2010.
Although HP missed buying Brocade, acquiring 3Com proves more compatible and powerful. For one, both vendors share a similar vision: interoperability and compatibility. In the HP to acquire 3Com conference call, HP’s 3Com acquisition was considered an accelerator to its “converged infrastructure strategy.” On the other side, the very name of 3Com (computers, communication and compatibility) echoes HP’s voice on converged infrastructure strategy.
Both vendors’ strengths also reside in Asian markets. HP’s 3Com acquisition will mean domination in China’s IT market share, a highly-valued strategic asset. (See HP-3Com acquisition hits Cisco the one place it hurts.) The shared market is seen as an upside, said Dave Donatelli, EVP and general manager of enterprise servers and networking. This is due to contrasting accounts which will further increase its position in China.
While the companies share a great deal (including offices in Marlborough and Silicon Valley), what differs is the game changer. 3Com’s portfolio has populated HP’s non-existent core networking infrastructure technology. These technologies will bring strength to its data center switching solutions.
“[3Com] broadens our entire capabilities. One of the biggest questions[/concerns] we’ve had from customers has been ‘We like your edge product, but we need you to be able to play across our entire networking infrastructure,’ and this acquisition enables us to do this — adding core switching, routing and security products to us,” said Donatelli.
In addition to 3Com’s core and edge routing, 3Com will offer its threat management, intrusion prevention and data center security solutions in what was HP’s weaker product portfolio.
With differing solutions being added to HP’s portfolio, there is hope that few layoffs will occur. However, comments across several websites (such as Twilight in the Valley of the Nerds’ HP’s 3Com acquisition post, Engadget’s HP to acquire 3Com in $2.7 billion deal story and The Metro West Daily News’ Marlborough’s 3Com to be sold $2.7B article) express fear of an addition to the rising U.S. unemployment rate.