International relations

Hewlett-Packard announced its intention to acquire network equipment manufacturer 3Com, offering $2.7 billion for the company.

The acquisition was seen as a shot across the bows of networking giant Cisco, whose relationship with HP is increasingly competitive (see ‘Cisco’s expansion opens new battle fronts).

The deal will bolster HP’s position in a number of ways. Most immediately, it will enhance the company’s existing ProLiant line of networking products, but it will also strengthen HP’s systems portfolio.

The growing use of virtualisation within enterprise architectures has driven demand for more sophisticated network switch functionality, such as the ability to move virtual machines across physical servers without dropping network connections.

Another asset is 3Com’s strong business in China. As well as manufacturing its equipment there, 3Com took half of its revenues in China in 2008.

Indeed, 3Com very nearly became a Chinese company last year, when Chinese telecom giant and key 3Com partner Huawei showed interest in part-acquiring it. The deal was called off, however, after the US government’s Committee on Foreign Investment in the US threatened to block the deal on national security grounds (3Com’s equipment is used in some military networks).

No such fears blocked another Chinese company from rampantly acquiring North American business software companies, as CDC Software – the applications arm of Chinese IT company CDC Corporation – picked up three vendors, two Canadian and one from the US.

Two of these, Truition and gomembers, are software-as-a-service providers, and the company said that the acquisitions boost its “roll-up” strategy – i.e. buying everything it can afford – in the growing on-demand software industry.

Analyst consolidation

The ever-dwindling number of substantially sized IT analyst companies took a tumble in November 2009 when Gartner acquired AMR Research, a specialist in supply chain IT strategy, for $64 million.

There has been mounting concern that certain analyst companies hold too great an influence over the business IT zeitgeist, and this acquisition will do nothing to allay those fears.

However, another interpretation of events is that the proliferation of small, independent analyst voices is driving the big names to consolidate.

Pete Swabey

Pete Swabey

Pete was Editor of Information Age and head of technology research for Vitesse Media plc from 2005 to 2013, before moving on to be Senior Editor and then Editorial Director at The Economist Intelligence...

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