Analyst Riffs On 'Brutal Consolidation' Theme In Hardware Sector

Top reasons for the recent $68 billion wave of acquisitions within the semiconductor sector largely apply, too, in the hardware sector, where an analyst said a similar merger trend could be pending. Cisco Systems, Inc.

and Hewlett-Packard Company

might end up leading the charge, according to UBS's Steven Milunovich. As emphasis in the computing hardware industry shifts from growth to cost cutting, shareholders will increasingly clamor for consolidation, according to Milunovich. A similar dynamic is currently driving mergers in the semiconductor industry, in Milunovich's view, although that industry is more fragmented than computing hardware. The analyst cited a recent address by Cisco's outgoing Chief Executive John T. Chambers. "You're going to see a brutal, brutal consolidation of the IT industry," Chambers told an annual Cisco conference last month. https://www.youtube.com/watch?v=ujBLqLFNr0s For Hewlett-Packard, "a merger with another goliath could make sense," according to Milunovich, who speculated on HP's potential combinations with EMC Corporation

or VMware, Inc.

. Cisco, meanwhile, needs storage according to Milunovich, who suggested possible acquisitions for Cisco include Nimble Storage Inc

as well as privately held Nutanix and NetApp Inc.

. Oracle Corporation

"could but probably won't" engage in a big hardware merger, in Milunovich's view. NetApp "may have waited too long, to sell itself, Milunovich said. But NetApp's technology and account base would make Cisco or Oracle a major storage player. International Business Machines Corp.

isn't on Milunovich's list of big acquirers. "Buying large companies doesn't do much for Big Blue, and paying way up for interesting new companies doesn't seem to be in its DNA'" Milunovich said.