Whenever a vendor decides that it's going to invade a space adjacent to the business it's already in, it needs to look to its own flank before launching the attack.
And right now, it looks like Cisco may have underestimated Hewlett-Packard's response to Cisco's decision to jump into the server category. With its move to acquire 3Com, HP is adding a significant amount of strength to its existing ProCurve networking line that already competes head-on with Cisco.
Prior to Cisco's decision to roll out a Unified Computing System that competes head-on with HP servers, an uneasy detente had existed between Cisco and HP. While they competed over network hardware, out in the field nobody from HP objected when Cisco network gear was bought alongside HP servers. But once Cisco sales people started pushing servers, all bets were off. Not only did HP respond by integrating its ProCurve group into the larger server organization, it has now acquired the one company that was mounting an aggressive challenge to Cisco's dominance in the networking space.
Backing up 3Com's challenge to Cisco is its manufacturing partner and single largest investor: the Chinese conglomerate called Huawei Technologies. By leveraging Huawei, 3Com has revamped its product line to compete successfully with just about every major network product line that Cisco has at price points that are typically 25 percent less than what Cisco charges.
3Com, of course, never had as many feet on the street or marketing muscle to more than annoy Cisco. But with HP's sales force now pushing those very same products, the networking landscape could look a whole lot different in few short months.
In the meantime, convergence of servers, storage and networking technologies brought on by the advent of virtualization in the data center will continue at a rapid pace. As that continues to happen, we'll see more mergers and acquisitions as the major vendors look to shore up their entire data center portfolios. What that means for EMC, NetApp, the rest of the networking infrastructure vendors and the systems vendors themselves is anybody's guess. But the buying and selling of fairly large companies is only just beginning.