HP Acquires 3Com For $2.7 Billion

With an eye on expanding its presence in the network equipment market, the world's largest technology company Hewlett-Packard has decided to take over 3com for a price tag of $2.7 billion in cash.

Explaining the logic behind its move to acquire leading networking gear maker 3com, Dave Donatelli, the general manager of HP's enterprise servers group mentioned "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."

The take over is set to mark a new rivalry between Cisco and HP in the technology sector as both these organisations are increasingly making forays into each others turf.

Some analysts believe that this take over by HP of 3com comes after Cisco decided to enter the server business and now HP has decided to enter the market which has been primarily been dominated by Cisco, supplying companies with gear that manages and secures data traffic.

However despite the merger, Cisco still stands head and shoulder above the competition in the network equipment market with an almost 67 percent share as compared to the combined standing of HP and 3com which currently has a portion six times smaller than the market leader.

Our Comments

A massive battle between HP and Cisco is looming. Expect 2010 to be the year when the knives will be out. Dell might be lurking in the shadows while IBM will be careful not to tread on anyone's toes and concentrate on the lucrative services market where it is already doing very, very well.

Related Links

3Com co-founder Metcalfe's take on HP-3Com buyout

(Computer World)

HP-3Com merger heats up Cisco competition

(ZDNet)

HP to buy 3Com Corp for $2.7 bn

(Business Standard)

Next big tech rivalry: HP vs. Cisco

(Cnn Money)