3Com says farewell to enterprise networks

3Com Corp. is stepping away from the large enterprise LAN/WAN and analogue modem businesses, in a move designed to focus on new high-growth markets.

“We are exiting three businesses that were not delivering growth and financial returns,” said Bruce Claflin, the president and COO of 3Com.

The company is discontinuing its CoreBuilder Layer 2/3 Gigabit Ethernet and ATM LAN switches, and its PathBuilder and NetBuilder WAN switches and routers. The last date for customer shipments for these products is June 30.

3Com is also selling its analogue desktop and PC Card modem business to a new company it is forming with Accton and NatSteel Electronics. This new company will research, design, market and sell Internet access products, including U.S. Robotics-branded analogue modems.

“Analogue modems are a technology that is in decline,” Claflin said. “The revenues in the market, in the industry, as well as for our company, were declining. It’s no longer attractive for us going forward. What is attractive for us going forward is broadband.”

Reaffirming his statement, Claflin said every product that 3Com sells from now on will be broadband-enabled.

The company will concentrate on the consumer, small/medium enterprise and network service provider markets with its HomeConnect, OfficeConnect, SuperStack, NBX and Total Control product lines. 3Com is stressing its brand name, channel structure and ease-of-use attributes as it focuses on these markets, and will commit technology resources to broadband access, wireless, LAN telephony, multiservice and home networking.

“Canada, by definition, is truly a small- to medium-sized business country,” said Nick Tidd, president of 3Com Canada. “When you’re building technology to address the needs of small to medium commercial size, it’s going to play quite nicely to the Canadian demographic.”

3Com announced two products that stress ease-of-use for small/medium businesses. They are the Switch 4000 line of pre-configured backbone switches and the SuperStack II Switch 9100, a copper-based Gigabit Ethernet switch.

For CoreBuilder customers, 3Com is expanding an existing relationship with Extreme Networks to migrate those customers to Extreme’s platforms. PathBuilder and NetBuilder customers are being transitioned to Motorola.

“We’re going to maintain the warranty through the duration of the products,” Tidd said. “Customers who are on the cusp of purchasing new product may wish to continue to do so…we’ll honour our warranty, and we’ll continue to offer consulting services for another year on those products as we wind them down.”

3Com is the latest company to throw in the towel on the large enterprise gear market.

“A number of networking companies are essentially being more focused on markets and products they can lead” with, Claflin said. “What we’re doing seems to be an industry trend.”

Cabletron recently split into four companies to better focus on high-growth markets, and Lucent last month spun off its enterprise businesses to eliminate a distraction as it targets the service provider arena. That leaves Cisco as the de facto standard in large enterprise data networks.

Claflin said it is expected that the partnerships – the analogue modem one in particular – will be operational at the end of this quarter or by the beginning of the next. The partnership with Extreme has “already been signed, and we are already in implementation mode.”

Dan McLean, an analyst with IDC Canada Ltd. in Toronto, said the move is good for the company.

“People were not thinking of 3Com as this enterprise networking company, quite frankly. They were thinking of it as a modem company, as a network interface card company, and mostly as a Palm Pilot Company. So they had some pretty serious issues as far as perception went.”

3Com is on the right track with its announcement, although it may not hit home right away. “I think short-term it’s going to mean confusion for customers, but long-term it will be a much stronger, more compelling message.”

– With files from IDG News Service.

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