Rumors of a networking acquisition have been flying around HP for years — I’ve heard the names Brocade, Extreme, Force10, and even Juniper thrown about. HP indeed followed this logic, but zigged with 3Com instead of zagging with one of these others.

Why 3Com? With the H3C and TippingPoint portfolios, HP got a far broader product line than it could have elsewhere. What’s more, H3C high-end switches and routers could be extremely disruptive as they could attack Cisco’s profit margin which could really hurt even if Cisco wins business.

All told, I really like this move but HP has some work to do. Here is my list of opportunities and challenges for HP moving forward:

Opportunities:

1. TippingPoint is an IPS/IDS leader and one of the elite players in the enterprise and service provider space. HP should use TippingPoint as a Trojan Horse to penetrate enterprise accounts. HP should also continue to invest in security as lots of dollars will continue to be spent in this area alone.
2. Everyone is talking about the data center and HP has a very strong portfolio of servers, storage, and networking. That said, HP would be wise to use its extensive distribution and enterprise customer base to sell 3Com core routers and switches too. HP should also double-down on a service provider vertical marketing strategy.
3. EDS should be incented to bundle 3Com into every big deal possible. There may be some big opportunities in the Federal space although H3C sales to government agencies may be difficult.
4. With 3Com and ProCurve, HP could lock down SMB sales. This should be a high priority. Yes, enterprise sales are the ultimate goal, but HP should spend ample time on the SMB space in order to prevent any incursion here.
5. HP should focus on ProCurve One partners. 3Com brings a lot but not all networking needs. HP needs a broader security portfolio, WAN optimization, and Application Delivery Controllers. HP should assure partners like F5 and Riverbed that the 3Com purchase means more business for everyone and follow this message with real programs and commitments. As for security, HP should now look for a security management vendor like ArcSight, LogLogic, LogRhythm, Nitro Security, or SenSage to complement TippingPoint.
6. HP should solidify its FCOE messages as it now has every incentive to push Ethernet for everything.
7. Select opportunities by geography and industry. While HP has a vast global presence, specific geographies and industries will be a much easier target than a broad horizontal go-to-market strategy. HP should focus on emerging markets as 3Com has done especially well there. As for industries, HP should concentrate on those that have been hit hard by the recession (State and local government, education, housing, etc.) and those in the midst of massive network upgrades (life sciences, telecommunications, media, healthcare, financial services). Strong vertical marketing will sell networking and lots of other equipment.

Challenges:

1. HP cannot assume that its storage and server field staff can sell networking. It needs to establish a killer enterprise networking salesforce. Many Cisco staffers are looking for new challenges so I would start there.
2. HP needs to rationalize its networking portfolio soon as it can’t support a multitude of devices, operating systems, and channels effectively. To do this, HP needs to figure out its end-of-life and support strategy and also articulate a clear roadmap to customers.
3. As previously mentioned, HP must lock up partners, not scare them away.
4. HP must become an enterprise networking vendor and not a data center-only player. If it only focuses on the data center, it will miss lots of other business opportunities.

In my opinion, the opportunities outnumber the challenges for HP. In the meantime, Cisco is likely pooh-poohing this merger externally but extremely concerned within the posh walls in San Jose.