enterprise networking

HP’s 3Com acquisition: Vendor market activity spurred the move

HP has made a somewhat-surprise move and acquired 3Com, a venerable but now fallen giant in the networking field, and the move is very likely an explicit a changing of the guard with respect to enterprise networking.

We’ve noted that the control of network decisions is passing to data center IT personnel, and thus that network sales engagement means having IT products in the portfolio. HP obviously has them and is just as obviously now planning to expand its network portfolio.

But we think Brocade’s purchase of Foundry and Cisco’s decision to enter the server space is the catalyst for the move. 3Com has a new data center switch product that could significantly augment the HP portfolio, and also a relationship with Huawei and a position in Asia.

Tapping the China market is likely an early goal for the deal. The HP move could put pressure on IBM, which has been relying on partnership relationships in networking rather than fielding its own product. It may also put some of the smaller vendors in the LAN space into play, including Extreme, and possibly Brocade or Juniper.

Amazon EC2, cloud computing and the enterprise

Amazon’s Elastic Cloud Computing (EC2) is gaining some traction as the framework for software vendors to offer software-as-a-service (SaaS). This is no surprise given that the value of cloud computing is most easily demonstrated for large-scale applications that could be highly variable in their requirements.

Amazon is also more of a “true cloud,” in that it offers greater flexibility and elasticity and imposes no major restrictions on applications (an x86 image is required). SaaS is also likely an early market for cloud computing because by nature it is incremental to current IT plans.

For cloud computing to be successful, though, it will have to move outside of these simple sideline and overflow missions and take on more mainstream applications. We believe that this can happen only by having enterprises adopt private cloud architectures for their own data centers, which would facilitate integration of public cloud resources.

Cisco positions for cloud computing move

Cisco is reportedly eyeing VMware for possible acquisition, a move that would surely put Cisco squarely into the IT competition and mark perhaps the most dramatic transformation of business model attempted by any major U.S. tech vendor.

There are other things that Cisco could be focusing on, but the recurring rumor we’ve heard is that Cisco plans a major cloud computing initiative, recognizing correctly that enterprise transition to a cloud computing model may be the most significant incremental spending opportunity in 2010 and 2011 (it isn’t likely to hit this year, so Cisco has some time).

Cloud computing is a strategic mixture of IT and networking, but it is also a space where having the total solution seems valuable, and Cisco fears that IBM, HP, or Microsoft might at best support a strategy that was open in terms of networking, and at worst ally with a competitor. IBM and Juniper have done some joint cloud announcements already.