HP buys 3Com for $ 2.7 billion

Another IT mega-deal became known today at night: HP announced the purchase of the manufacturer of the network infrastructure 3Com for $ 2.7 billion. They plan to close the deal in the first half of 2010.

For the network equipment market, this is the largest recent transaction that can drastically change the position of players. In the face of HP, there is now a real competitor to Cisco, all the more so since HP had already begun to expand its line of network equipment.

In fact, HP and Cisco are becoming direct competitors in a variety of ways. However, everything is quite logical. Cisco itself asked for it, if I may say so.

Here is what we wrote in January 2009, in the article "Cisco begins to release servers" :
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Over the next few months, Cisco will launch a product that can, without exaggeration, put the global IT industry on its ears and make Cisco a direct competitor to companies like HP and IBM. We are talking about the release of this server with embedded virtualization software. The reaction of HP and IBM is difficult to even imagine. A very serious conflict is possible, to the extent that HP and IBM will launch the production of network equipment under their own brands (the HP ProCurve line can be continued).

Previously, there was a tacit agreement with HP, IBM, and Dell: Cisco makes network devices, and they do the rest. Now everything will change.

Analysts predict Cisco big problems. First, this is the aforementioned conflict with other IT giants. Secondly, in the server market, profitability is much lower than Cisco used to in the network equipment market (25% compared to 65%).