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3/18/2010
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HP-3Com Vs. Cisco: Who Will Be Your Network Provider?

Fresh from an HP analyst summit, Steve Hilton of Analysys Mason takes a hard look at how the newly combined HP-3Com will fare against Cisco.

SteveHilton
Steve Hilton

Recently, I attended the HP Enterprise Business Industry Analyst Summit in Boston. Only slightly obscured by all the usual trash talking is the key question of what the 3Com acquisition buys HP in the networking space. Let's layout the HP argument and I'll tell you why I'm not buying a word of it.

HP claims it will begin chipping away at Cisco's market share by combining newer, better, and cheaper 3Com networking solutions into the HP technology fabric of hardware, software, and services. Right now, HP is the #2 networking supplier in the world and 3Com is #3. When they combine, they will be the #2 networking supplier in the world. If that non-shift in the market share doesn't illustrate the extent of Cisco's dominance, what does?

During the morning session at this analyst event, HP highlighted some of the strong points about 3Com. For example, 3Com's market share in one of the fastest growth markets in the world - China-- is a solid a #2. In addition, 3Com has a set of core networking products and security solutions (not to mention edge and data center solutions) that fill some of the holes in the HP portfolio. These products when offered through the HP channel with HP services attached will give Cisco a big run for their money.

Here's my view: The enterprises that want to purchase 3Com networking gear have already done so. Adding an HP logo to 3Com gear isn't going to alter the landscape. Enterprises don't buy the cheapest networking gear they can find. Networking isn't a market that has commoditized like the server business, and while a commoditized networking business would play into HP's hands, enterprises aren't ready to swap out core Cisco gear in favor of alternative solutions even if they are cheaper. As I learned in Marketing 101, price implies quality.

And as we've already seen, Cisco isn't about to roll-over and allow HP to apply its high-volume, supply-chain game to the networking space. Cisco has publicly stated they won't concede any share in the networking sector and have created a series of architectures to tackle data center, networking, UC, and a host of other high growth initiatives. In addition, last month Cisco fired a salvo across the bow of the HP battleship by discontinuing HP's Gold level certification.

Furthermore, I believe 3Com had more success in the SMB space than in the enterprise space. Although over the last 2 years, 3Com hasn't wanted to talk with me about anything SMB-related. The 3Com dialogs were always about large enterprises, although they remained a distant third in the networking race to HP and Cisco.

Better, newer, and cheaper networking gear from HP and 3Com. I'm not convinced this is going to alter the state of the enterprise networking market.

Steve Hilton is the lead analyst for Analysys Mason's Enterprise program, which explores the needs of the enterprise, small enterprise, and SOHO ecosystems. Steve has 17 years' experience in technology and communications marketing. Prior to joining Analysys Mason, Steve spent 6 years managing the Enterprise and SMB team at Yankee Group. He has also held senior positions at Lucent Technologies, TDS and Cambridge Strategic Management Group (CSMG). Steve is a frequent speaker at industry and client forums, and he maintains a brisk pace of market outreach activities with the popular, business and trade media. He publishes monthly articles in several respected trade journals for the enterprise and channel partner community. Steve holds a degree in economics from the University of Chicago and a Master's degree in marketing from Northwestern University's Kellogg School of Management.


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