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November 12, 2009

HP to Buy 3Com for $2.7 Billion

Hewlett-Packard announced plans this week to acquire networking switching, routing and security solutions vendor 3Com for $2.7 billion.
The merger of the two companies will help HP bolster its data center strategy, which focuses on the linkage of servers, storage, networking, management, facilities and services, the company said. As a result, the business will help customers “simplify the network, deploy a unique and innovative edge-to-core network fabric for the enterprise and improve IT service delivery capabilities,” company officials said.
“Companies are looking for ways to break free from the business limitations imposed by a networking paradigm that has been dominated by a single vendor,” Dave Donatelli, executive vice president and general manager, enterprise servers and networking, HP, said in a statement. “By acquiring 3Com (News - Alert), we are accelerating the execution of our Converged Infrastructure strategy and bringing disruptive change to the networking industry. By combining HP ProCurve offerings with 3Com’s extensive set of solutions, we will enable customers to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center.”
With 3Com under its portfolio, HP can expand its HP’s Ethernet switching offerings, add routing solutions and strengthen its position in China. The combination will also help HP add a large R&D team in China that will further boost the company’s networking solutions, the company said.
3Com has three global brands—H3C, 3Com, and TippingPoint — that offer networking and security solutions to large and small enterprises.
“Our extensive product line and innovative technology together with HP’s breadth and scale will expand our global opportunity,” Bob Mao, CEO, 3Com, said in a statement. “3Com’s networking products are based on a modern architecture which has been designed to offer better performance, require less power and eliminate administrative complexity when compared against current network offerings. Our products are enterprise proven and widely deployed in the world’s largest banks, manufacturers, Internet service providers, public utilities and retailers.”
The transaction is expected to close in the first half of 2010.
HP acquisition of 3Com is the latest move by Mark Hurd, the company’s CEO, to remake the company, the Wall Street Journal reported. Since joining the company in 2005, Hurd reportedly has slashed cut costs and ramped up the company’s tech consulting divisions, the report said. And last year, HP bought Electronic Data Systems (News - Alert) Inc. for $13 billion, increasing its competition with IBM, the Journal said.
Industry officials said will enhance HP’s market position and help it better compete with Cisco Systems and other companies.

"It gives HP additional scale within the low-to-mid tier wireless and networking market. It matches up with HP's switches that compete with Cisco (News - Alert)," Shannon Cross at Cross Research, said.
The move comes amid a host of acquisitions by Cisco and other technology companies trying to broaden their product portfolios and provide a "one-stop shop" for computing, networking and storage equipment, officials said.

Amy Tierney is a Web editor for TMCnet, covering business communications Her areas of focus include conferencing, SIP, Fax over IP, unified communications and telepresence. Amy also writes about education and healthcare technology, overseeing production of e-Newsletters on those topics as well as communications solutions and UC. To read more of Amy's articles, please visit her columnist page.

Edited by Amy Tierney

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