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HP's Shot Across Cisco's Bow

Earlier this year, Cisco opened a major front against one-time partners Hewlett-Packard and IBM in the hotly competitive, and fast-growing server market with its blade, and so-called Unified Computing System initiative. The competition, and headlines it generated, become so intense so quickly that Cisco even posted a blog entitled "Is HP Now a Friend or Foe of Cisco?"

Cisco, in that post, said its new strategy was simply about answering HP's decision to enter its own business several years earlier. Cisco's Chief Technology Officer Padmasree Warrior told the Wall Street Journal in March, "We're going to compete with HP. I don't want to sugarcoat that. There is bound to be change in the landscape of who you compete with and who you partner with."

Cisco's entry into the server market, especially as massive data centers crop up all over the place like mushrooms representing enormous growth opportunities for the major players in the space, sent shivers and ripples through HP and IBM. In fact, other than all the innovation and growth in the wireless world, servers, databases and data centers might represent the single biggest, and most dynamic opportunities for major tech firms. IDC says server business this year alone will top $100 billion sector wide.

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And HP took a big step tonight in fighting back, announcing a nearly $3 billion play for 3Com , in HP's fourth largest acquisition ever.

The $7.90 a share is a nice, 40 percent premium to 3Com's trading price yesterday. It positions HP as a key, end-to-end supplier for datacenter customers, and is a huge step forward in staunching the increasing threat from Cisco.

So that leaves IBM which will be forced to answer this move, analysts and industry sources tell me. So, watch the likes of Brocade Communications , Citrix Systems , even Juniper Networks . IBM already enjoys partnerships with Brocade and Juniper thanks to its acquisition of Foundry Networks . Would it take a bolder step and pursue a major acquisition of its own? Likely.

On the blade server side of the market, HP leads IBM, and Dell brings up the rear, in a distant third. Could IBM make a play for Dell ? Unlikely since IBM already bolted from the PC market when it did its deal with Lenovo. Unlikely IBM would buy all of Dell for its paltry server business, and there's little chance Dell would want to unload it, but anything's possible, I suppose.

But you wonder why IBM didn't beat HP to the punch with a 3Com play of its own. IBM is on the acquisition hunt, but maybe it was scared off because of regulatory issues? Maybe it's still smarting from the Sun Microsystems fiasco? Maybe it had no interest in 3Com, preferring to rely on the assets it already has in place to stake its claim in the server market. I don't buy that. I see IBM answering this move, and soon. Servers and the growth it offers is too important of a growth market for IBM to stand pat.

Cisco made its move earlier this year. HP answered today. The move is now IBM's. And it's not a question of if, but when.

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