It's hard to look at a deal the like Hewlett-Packard's $2.7 billion buyout of 3Com outside the lens of the major corporate-industrial machinations that are driving the data center sector right now.
And clearly, this one will have a significant impact on the fortunes of not only HP and 3Com, but Cisco, Brocade, IBM and countless others.
But in a practical sense, there are some very sensible, if not altogether obvious reasons the deal makes sense for HP. The first is the idea of the complete edge-to-core network. As CTO Edge's Dan Berthiaume points out, the race has been on for some time among the major platform vendors to provide a one-stop-shop for all your data center needs. Not only does dealing with one supplier make the integration process that much smoother, but it allows technology advancements to be implemented systemwide -- that is, no more loading up on new servers or new network infrastructure and then trying to tweak the rest of the environment to make it work. New capabilities can be introduced across the entire network, all at once.
Still, the question remains: why should HP want to shell out a fortune for networking prowess when it already has a network platform, the ProCurve line, in house? HP's top dog for servers and networking, David Donatelli, has stated flatly that the 3Com portfolio will be combined with the ProCurve line "to build a next-generation network infrastructure that supports customer needs from the edge of the network to the heart of the data center." So the question becomes: What does 3Com have the HP doesn't?
As I see it, the jewel in this crown is core switching capability. And not just any core switch, but one that can comfortably fit into the largest of the large enterprises -- one that can counter what Cisco has with the Nexus 7000.
Enter the S12500 developed by H3C, 3Com's joint venture with Chinese firm Huawei, a monster of a device that can deliver 2.2 billion packets per second (pps) via a 6.6 Tbps non-blocking fabric powered by a single-pane management system. Not only does the unit represent a vast improvement over ProCurve's existing core switch, the 8212zl, which has seen relatively little action since its introduction more than two years ago -- but it provides an excellent wedge into the red-hot Chinese IT industry.
To be sure, there are other prizes to be had from 3Com, such as the Tipping Point security platform and a wide range of small-to-large core and edge systems. But if the driving force behind all of these industry moves of late are centered around network convergence, then a rock-solid core architecture is the ante you need to get in on the game.
Much of the industry, and Wall Street for that matter, seems to have blessed the deal already, which indicates that $2.7 billion is a reasonable price to pay. But that's still a rather large pile that can only be justified if the revenue stream for major network re-engineering projects lives up to its expectations.
Leading indicators suggest that existing data centers are gearing up for a revamp at a time when new cloud-based and hosted services are springing up around the world. So there is likely to be a lot of opportunity, as long as HP can convince users that it has the right stuff.