HPE: Tsinghua buys 51% stake in New H3C for $2.3 bn

Hewlett Packard Enterprise office
Hewlett Packard Enterprise (HPE) said Unisplendour Corporation, Tsinghua Holdings subsidiary, has purchased a 51 percent stake in New H3C for $2.3 billion.

HPE has a 49 percent stake in the new company. Arun Chandra, senior vice president and COO of HPE’s Enterprise Group, will serve as the chairman of New H3C.

New H3C Group, headquartered in Hangzhou and Beijing, comprises H3C Technologies and HPE’s China-based server, storage and technology services businesses. HPE plans to return the majority of the cash to shareholders through share repurchases.

New H3C offers enterprise IT solutions, including networking, servers, storage, hyper-converged systems, and IT management products. New H3C also provides a full range of HPE branded servers, storage and technology services.

IDC on New H3C

Kitty Fok, managing director of IDC China, said the new H3C Group will enter the market with a suite of enterprise-grade products. “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.”

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 changed in the last year, with more partnerships — go-to-market, joint ventures, or acquisitions.

Some of 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 alliances and Huawei become top 5 vendors in China datacenter market.

In 2015, the five leading vendors monopolized over 67 percent 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.