The 3Com acquisition is a definite plus to HP’s suite of data centre offerings (triple play of server, storage and networking), but integration problems could be quite daunting
However, the company had a mostly downhill journey until it acquired H3C in China, and has since seen a rebound in fortunes. Although HP has a presence in networking with its Procurve line, it has a lot of gaps in its portfolio, particularly at the high end, which make it difficult to make major client wins and create more value.
3Com provides vital missing links to the enterprise data switch portfolio, apart from giving HP enhanced capability in VOIP technology, which will improve upon HP’s UCC (Unified Communication and Collaboration) capabilities. Moreover, H3C has done wonders for 3Com, as a lot of interesting work is happening there. It gives HP a range of dedicated engineers, mostly in China (an anecdote on the web hilariously mentions how the authorities at H3C need to ring bells at regular intervals to remind their employees to eat, since there have been instances of people dying at work because they forgot to feed themselves!).
Of course, the Chinese cost advantage is expected to come into play as well, when it comes to competing with other vendors. Mark Hurd would, however, do well to realize that beating Cisco on its own turf would not be the apt strategy. Charles King, Principal Analyst, Pund-IT, Inc. opines thus, “HP has invested a great deal of human and financial capital into its own ProCurve networking line but its products have had little impact outside of the HP installed base. By purchasing 3Com, the company has acquired a number of products which are highly complementary to its own. More importantly, though, HP now has a globally recognized networking brand that should help broaden the interest in and appeal of its own products.” In fact, that should be HP’s primary basis of utilizing the 3Com acquisition for now, as going head to head with Cisco will take a while, as market share data clearly indicates. In that sense, Juniper, which is number 2 in terms of market share to Cisco, would have been a better choice, as Shaw Wu, IT Hardware & storage analyst, Kaufmann Bros. indicates, “While we are not surprised that HP is making an acquisition in the networking space, we are somewhat surprised it is 3Com. Juniper is viewed as a prized asset and number 2 to Cisco but its market capitalization at $13 billion and likely acquisition premium are likely a bit daunting, even compared to HP’s $119 billion mega-cap status.”
Even if the company in question is 3Com, HP may not be able to shy away from integration issues, especially due to the culture mismatch. Zeus Keravala, Senior Vice President - Global Enterprise and Consumer Research, Yankee Group, asserts that Chinese nationalist interests could prove risky for the deal.
However, the company had a mostly downhill journey until it acquired H3C in China, and has since seen a rebound in fortunes. Although HP has a presence in networking with its Procurve line, it has a lot of gaps in its portfolio, particularly at the high end, which make it difficult to make major client wins and create more value.
3Com provides vital missing links to the enterprise data switch portfolio, apart from giving HP enhanced capability in VOIP technology, which will improve upon HP’s UCC (Unified Communication and Collaboration) capabilities. Moreover, H3C has done wonders for 3Com, as a lot of interesting work is happening there. It gives HP a range of dedicated engineers, mostly in China (an anecdote on the web hilariously mentions how the authorities at H3C need to ring bells at regular intervals to remind their employees to eat, since there have been instances of people dying at work because they forgot to feed themselves!).
Of course, the Chinese cost advantage is expected to come into play as well, when it comes to competing with other vendors. Mark Hurd would, however, do well to realize that beating Cisco on its own turf would not be the apt strategy. Charles King, Principal Analyst, Pund-IT, Inc. opines thus, “HP has invested a great deal of human and financial capital into its own ProCurve networking line but its products have had little impact outside of the HP installed base. By purchasing 3Com, the company has acquired a number of products which are highly complementary to its own. More importantly, though, HP now has a globally recognized networking brand that should help broaden the interest in and appeal of its own products.” In fact, that should be HP’s primary basis of utilizing the 3Com acquisition for now, as going head to head with Cisco will take a while, as market share data clearly indicates. In that sense, Juniper, which is number 2 in terms of market share to Cisco, would have been a better choice, as Shaw Wu, IT Hardware & storage analyst, Kaufmann Bros. indicates, “While we are not surprised that HP is making an acquisition in the networking space, we are somewhat surprised it is 3Com. Juniper is viewed as a prized asset and number 2 to Cisco but its market capitalization at $13 billion and likely acquisition premium are likely a bit daunting, even compared to HP’s $119 billion mega-cap status.”
Even if the company in question is 3Com, HP may not be able to shy away from integration issues, especially due to the culture mismatch. Zeus Keravala, Senior Vice President - Global Enterprise and Consumer Research, Yankee Group, asserts that Chinese nationalist interests could prove risky for the deal.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
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