HP Gains $164 Million Security Business with 3Com, but Lots of Overlap Too

| Nov 12, 2009 | Enterprise Security | Competitive Intelligence Report

| Analyst: Paula Musich

Current Perspective: Neutral
Vendor Importance: High
Market Impact: High

Event Summary

November 11, 2009 – HP inked a deal to acquire 3Com Corp. for $2.7 billion in cash, in a deal driven by HP’s data center strategy that also nets it the leading supplier of intrusion prevention system (IPS) technology, which the company claims is already in use by 30 percent of the Fortune 1000.

Analytical Summary

• Current Perspective: Neutral on HP’s acquisition of 3Com and its bifurcated threat management business, because while it brings to HP’s security business the leading intrusion prevention system product portfolio in TippingPoint, it also creates an overlapping threat management product line and adds greater complexity and serious rationalization requirements to HP’s confusing array of security options. HP’s ProCurve unit was only just starting to deliver on a more cohesive security strategy, and 3Com was only just starting to integrate its independent TippingPoint unit into its broader business, which also includes firewall and VPN products.

• Vendor Importance: High to HP’s security business, because the 3Com acquisition delivers an industry leading IPS product portfolio which helps to raise HP’s relatively low profile in the security market and gives it greater ammunition to fight off Cisco’s bid to move into data center computing. HP can also exploit the investment TippingPoint just made in its brand new TippingPoint N IPS platform. HP also gains network access control products as well as new firewall and VPN products integrated with H3C’s Comware operating system.

• Market Impact: High on the IPS market, because it gives the industry leading IPS the broadest global presence it could ever hope for, along with access to a large network of HP resellers and a huge direct sales force. Moderate to the overall enterprise security market, because HP has ahead of it a sizable rationalization challenge and difficult balancing act in keeping its strategic security partners McAfee and Symantec happy while marketing underdog perimeter security products against them.

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Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

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Recommended Competitor Actions

• Large rivals with a broad set of security products should characterize HP’s security business as a confusing and conflicting set of products that lack integration. Competitors can cast doubts about the long term commitment HP has to overlapping security products.

• Strategic security partners such as McAfee and Symantec, who are now finding themselves in a position of competing against their partner, should press HP for clarification on how it intends to treat their relationships and understand what happens when they compete for the same business with rival products.

• Cisco and IBM, which both have sizable security portfolios, should characterize HP’s security business as providing little more than a table stakes level of security functionality. Cisco in particular can fault HP for lacking any content security offering at a time when the market is demanding such solutions in both appliance and cloud-based SaaS service form factors.

Recommended End User / Customer Actions

• Customers using security technologies that overlap between HP and 3Com offerings should press HP for details on its integration roadmap as soon as HP can make that available. Customers will want to know how HP intends to continue to support redundant security products/technologies.

• New or prospective customers should press HP to extend its lifetime warranty to the new security products it is gaining with the 3Com acquisition.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - More reports in Enterprise Security | More information

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