IDC: New H3C Group Starts Era of New Enterprise IT Giants in China

One year after the announcement of the subsidiary of Tsinghua Holdings, Unisplendour Corporation Limited’s plans to acquire 51% share of H3C Technologies and Hewlett Packard Enterprise’s China-based server, storage and technology services business, the company finally completed the acquisition at approximately US$ 2.3 billion, forming the New H3C Group. The New H3C Group will be the exclusive provider of Hewlett Packard Enterprise’s server, storage, and networking, as well as hardware support services in China.

Kitty Fok , Managing Director of IDC China believes that, “The establishment of the New H3C Group is the start of a new chapter in China’s competitive enterprise landscape. The New H3C Group will enter the market with a complete suite of enterprise-grade products, and will also reestablish themselves as a local vendor. If they are able to remain user-centric, follow the industry trend of digital transformation, continue to invest in research and development, and overcome competitor challenges, the New H3C Group will become a force to contend with in the China IT market.”

Enterprises have to go on a digital transformation journey, and invest in technology to grow their business in China. Datacenter is no doubt an area where investments will be made, thus demand for equipment feeding into the datacenter market, such as servers, storage, networking, software and services, will continue to maintain a strong growth.

In this market environment, the New H3C Group can leverage their new status as a local vendor to better target government related enterprises, for example, in the transportation or utility industries. The New H3C Group will also be leveraging their localized, high-touch, customer first model – a strength they had even before the acquisition. There are also plans to continue building innovations upon their existing products, to bring forth the future of compute infrastructure, ensuring that they maintain competitiveness in the market.

The landscape has also changed in the last year, with more partnerships, be it joint go-to-market, joint ventures, or acquisition in some cases, formed between vendors, or between vendors and manufacturers both in China and globally. This is mainly to build an end-to-end enterprise solution, as well as to adhere to the trend of shifting towards domestic production for China consumption. Some of the partnership examples seen since Unisplendour announced their intention to acquire H3C Technologies and Hewlett Packard Enterprise’s China business includes that of Inspur’s joint venture with Cisco, Lenovo’s global partnership with Juniper, and Dell’s acquisition of EMC. These four alliance and Huawei becomes top 5 vendors in China datacenter market.

In 2015, the five leading vendors monopolized over 67% of China’s IT infrastructure market. At the same time, their growth rate exceeded that of their smaller competitors. The emergence of several giants in the market suggests that competition will only become more intense in the future.

We also need to consider that joint venture and cooperation between companies is no easy task, especially in the enterprise IT market. There are multiple aspects to adjust and integrate which will take time – including product line analysis and positioning, technology investment and development, integration of differing channels, unification of marketing information and promotion, and cultural integration. Successful cooperation will require both parties to establish and work towards a common vision and goals, working hand in hand to face any challenges that may emerge.

Tags: H3C, HPE

Category: News