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3Com sets sights on high growth areas

Six months since its dramatic exit from the enterprise WAN market and 3Com is going radically simple.

On March 20th of this year 3Com ducked out of the enterprise WAN market when it abruptly stopped development and production of its NetBuilder and CoreBuilder product range.

Announced simultaneously, was 3Com’s divestiture from its analogue modem business and the spinning of a separate company under the old US Robotics brand name.

The combination of the earlier Palm spin off and the setting up of a separate analogue modem company has reduced 3Com’s size by a third, to about $4 billion.

All in all, in less than a year 3Com has totally transformed its appearance, from organisation that once touted its ability to go head to head with the likes of Cisco, to a networking vendor that wants to focus on highly profitable segments of the market.

“The number one thing for the company was that 3Com had to get back into serious growth because the network business is exploding and we were not exploding — we were trucking along a fairly flat business path,” says John Rea, managing director, Multi Country Region, 3Com Europe.

“By getting out of some of the things that we were doing as a company, we’re now incredibly focused on the things that are left,” Rea added.

Despite the March 20th declaration the and ensuing departure of engineering talent to arch rivals, 3Com is still determined to play in the enterprise space. Rea admits the handling of the whole affair was messy.

“The combination of the message we put out at the time and way it was received or interpreted was that we were pulling out of the enterprise space — that is nonsense,” says Rea.

“What we actually did was stop selling some products. [But] we announced [this] as an exit from the high end market place.”
Part of the earlier confusion stemmed from the interpretation of what exactly was a ‘small to medium business.’ In the US companies with between 5 and 6 thousand users are termed as SMB.

Obviously, in emerging markets, including the Middle East, companies with this volume of users would be described as large network environment.

According to Rea, 3Com is more than capable of delivering devices to run large networks. The networking vendor is a case in point — the entire of 3Com, a Fortune 100 company runs on a network of Switch 4007. And if 3Com can do it, then by definition there are many other companies that can do it, says Rea.

“There aren’t many companies that have many locations with more than a 1000 people in on building in one building,” adds Rea.

With its focus firmly on the high growth areas of networking in both the consumer and SMB Internet markets, 3Com hopes sales will rocket to 40% annually.

Key to sustaining that high growth is going to be the next generation of ‘radically simple,’ networking devices, in areas like LAN telephony and wiresless, which should be delivered in time for Gitex. The whole concept of radically simple is based around sophisticated networking solutions, which are both robust and simple to use. “Radically simple is actually built into the design of the product,” explains Colin Summers, general manager of 3Com’s Middle East & North Africa operation.

3Com’s future products will be “tested for gigabit speed, tested for resilience, for security, robustness and 'radically simplicity' for the user is also a key,” adds Summers.

After spending the last few months travelling, around seeing local partners and key customers, Summers believes, the networking vendor has spread the word about the reinvented 3Com.

“A lot of customers that were in a state of shock about what was going on are actually inviting us back through the door to do projects,” says Summers. “We’re sitting here smiling and that is because of our growth… we’re in the middle of a nice growth path here. We’re taking on more people and we couldn’t do that unless there was the business to support that.”

Quoted in InformationWeek, Forrester Research analyst, Galen Schreck praised 3Com for its decision to abandon the WAN market, but “how successfully they are will depend on how well they execute this new strategy. The jury is still out.”

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