HP’s Acquisition Further Pits Tech Giants Against One Another

by David Gibbs

On Wednesday after the bell, HP (HPQ) announced that they had acquired former tech big shot 3Com (COMS) for $2.7 billion in cash. This is only the most recent move in what has become large-scale square offs between the likes of HP, Cisco (CSCO), IBM, Oracle (ORCL), and DELL. For many years these companies maintained themselves within their particular areas of strength, but “amid shrinking tech spending over the past year, these giants have pursued new growth by spilling into each other’s turf, sparking new competition and undoing what had been friendly relationships.” (WSJ)

With 3Com in tow, HP can now compete for sales of networking gear, an area normally dominated by Cisco. This, however, comes after Cisco moved into the server business, normally that of HP and Dell. According to Oracle CEO Larry Ellison, “The goal is now to sell complete systems made of chips, computers, storage devices and software.” He hopes that this approach will “appeal to corporate customers tired of assembling technology from multiple vendors.”

Looking to the future, CNBC’s Jim Goldman believes that both Brocade (BRCD) and Juniper Networks (JNPR), both of whom are competitors of 3Com, are prime targets to be taken over, most likely by IBM.

Author's Disclosure: No positions in the companies mentioned.

Comments

[BeachRider:]

3Com's 8800/7900/7700 offerings aren't typically favored over CSCO's 6500/4500 strategy. Management of 10+ switches also favors CSCO (mainly due to software). HP even had CSCO switches for its blades, because their proprietary switches got into management problems interoperating with CSCO.

It is clear the CSCO 'declared war' when they issued blades, so some response from HP was needed, there just needs to be more on the planning-horizon to justify 3Com as the best response.

Nov 13 12:35 PM

[chris coonan:]

HP needs to buy a computer company that knows how to manufacture quality computers! I own a dead HP laptop, that I purchased in NOVEMBER of LAST YEAR!!!! WHAT A LEMON.....

Nov 17 06:26 AM