Posted by: Shamus McGillicuddy
3Com, Cisco, H3C, HP ProCurve, mergers and acquisitions, Networking Channel
There’s no question that HP’s $2.7 billion acquisition of 3Com is all about H3C. As Rivka Little, editor of SearchNetworking.com noted, 3Com’s H3C brand has a very strong foothold in China, and 3Com has found some success in pushing this newish networking brand out of Asia and into Europe and Latin America. HP’s go-to-market power combined with H3C’s Chinese-engineered high end networking portfolio could present finally a formidable networking dueling partner for Cisco.
H3C was originally a joint venture venture between 3Com and Chinese telecom networking vendor Huawei. 3Com bought out Huawei a couple years ago, and relaunched H3C as its enterprise networking brand last May. H3C gave 3Com the technology it needed to succeed in the enterprise networking space again. It just needed a sales channel in North America to get back to where it wanted to be.
That is something that has eluded 3Com. As the Daily Finance blog noted, 3Com has a weak sales channel with almost no enterprise IT VARs in North America. It mostly abandoned the enterprise networking market abruptly in 2000, essentially abandoning a large number of VARs at the same time. 3Com’s move was a strategic response to the Internet bubble’s burst and the rise of Cisco. Regardless of what you think of that move, there is no question that 3Com has tried and failed to re-enter the enterprise space a few times since. H3C probably represents its best effort yet.
While 3Com has muddled along, HP has been busy building up its own ProCurve networking business. ProCurve has been growing rapidly, with a strong network edge product line and good penetration into the midmarket enterprise space. But ProCurve has not yet developed a winning strategy for data center core-to-edge switching and routing, something essential to competing for large enterprise business with Cisco. 3Com’s H3C products could give it the technology it needs.
ProCurve’s channel partners will be a key ingredient to HP’s 3Com deal having an impact outside of China. No doubt HP will do everything it can to make this work for partners. HP and 3Com are already having internal discussion about how to integrate the two companies. If and when the merger is approved, ProCurve VARs should expect a big rollout of new sales incentives, training and partnership opportunities built around the newly acquired products.
This will be a good opportunity for ProCurve partners to compete more directly head-to-head with Cisco, both in the midmarket and in the enterprise. ProCurve VARs should find themselves more able to compete for data center networking deals in particular, where 3Com’s H3C products show a lot of promise.
But ProCurve partners should also watch carefully to see how deal shakes up parts of the ProCurve business that have been so successful for VARs. For instance, what brand will HP move forward with in networking? ProCurve, 3Com, H3C? I think VARs will hope HP sticks with ProCurve, which has has a good name these days.
Also, what will happen to the ProCurve unlimited lifetime warranty? ProCurve customers love that warranty because it reduces total cost of ownership tremendously. Will it extend to the 3Com product line? Will HP be able to afford lifetime warranties on such a broad line of products? Will it pull back the warranty on the ProCurve product line to any extent?
VARs should also watch closely to see which products are phased out as a result of the merger. 3Com’s Tipping Point network security brand is superior to a lot of comparable HP offerings, so we may see some HP security products phased out. Overlap in the network infrastructure product portfolios is not as extensive, but some switches could be phased out.
Both 3Com and HP ProCurve also heavily tout their open, standards-based approach to networking, but there will still be a great deal of product integration work to do. If customers are going to install both 3Com and ProCurve products in their networks, they will expect the two product groups to work together seamlessly with one management interface. ProCurve did a good job of integrated the wireless LAN products of Colubris after HP bought that company more than a year ago, so that’s a good sign. But VARs need to keep an eye on how this proceeds.