HP triumphs Cisco with 3Com’s acquisition?‏

Hewlett-Packard, California based technology giant has announced that it will acquire 3Com Corp. for $2.7 billion. HP plans the deal as a catalyst for an assault on the market leader in networking, Cisco Systems and reclaims its business in China as 3Com has a large presence in the country, which can help HP to expand sales into one of the world’s fastest-growing markets.

HP announced the deal after the market closed with an offer price of $7.90 per share, which is a premium of about 39% to 3Com’s closing price. The terms and conditions of the deal have been approved by the HP and 3Com board of directors. HP added that the deal is expected to close in the first half of 2010.

3Com Corp

3Com was co-founded by Robert Metcalfe, the inventor of Ethernet and is best known for its computer network infrastructure products. Its name emphasizes on “Computers, Communication and Compatibility“. The Marlborough, Massachusetts based 3Com has 9,200 employees.

What 3Com will provide to HP?

With the 3Com purchase, HP becomes the world’s number two networking vendor after Cisco, with a foothold in security (as 3Com owns TippingPoint), switches and routers. The latest acquisition will fasten the tiff with Cisco for data center customers. However, the acquisition will renovate the networking industry and emphasize HP’s next-generation data center strategy built on the converged infrastructure of servers, storage, networking, management, facilities and services.

It seems that the new entity will help users to simplify the network for the enterprises and improve IT service delivery capabilities with best-in-class costing. Also, HP will become a one-stop shop for corporate customers for all their needs and will bring disruptive changes in the networking industry. Further, the company will also target Cisco and its Unified Computing System (UCS), which threatens to encroach HP’s blade server turf.

According to Mr. Dave Donatelli, executive VP & GM, Enterprise Servers and Networking, HP, the company will combine its HP ProCurve platform with 3Com’s offerings, which will provide customers a next-generation network infrastructure to furnish all the requirements. But, the idea to acquire 3Com indicates that HP wants to be number one networking vendor beating Cisco Systems.

Competitors’ response

Recently, other technology giants like IBM Corp and Oracle Corp also in acquiring spree to encroach each other’s domains. Like HP, they also want to become one stop shop for all the facilities like computing, networking and data storage. Further, Cisco has acquired Starent Networks Corp for $2.9 billion on October 13th and also pushed into the server market, which is a major domain of HP.

Recently, Cisco, EMC and VMware Inc. had formed a joint venture called “Acadia,” which will offer the networking, server, storage and virtualization technologies for cloud computing solutions.

Discussion

Last year, Hewlett Packard had acquired Electronic Data Systems Corp, the services provider for $13.9 billion, which significantly improved the company’s ability to provide IT services to enterprise organizations. The 3Com acquisition will strengthen the company’s position in China and become a one-stop shop for corporate customers seeking everything from servers to networking equipment.

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