3COM: Now China, Next India

The final curtains have come down on the Huawei—3Com joint

venture, H3C, with the completion of the integration of H3C with 3Com. With

this, the game plan of enterprise networking market has also changed gears.

The integration brings to 3Com's plate the advantage of having

a lower cost-base associated with being in China. This gives it an impetus to

undercut its rivals, and that's not just Cisco-it's a range of other

companies, all of whom now target the SMB and enterprise markets that 3Com used

to sell into and wants to regain.

"In a matter of three years, we have improved our market

share of less than 10-30% in China," says Edgar Masri, president and CEO,

3Com. With the absorption of H3C, the new outfit will have its R&D, its

production and most of its 6,400 staff all based in China. It also gives 3Com an

extra distribution channel via its former partner, Huawei. Most importantly, the

integration gives 3Com access to technologies from H3C that it didn't have

before, such as security, storage, and IP surveillance.

Turnaround on the Cards



Almost two decades ago, 3Com was a big brand in networking when current
networking giant Cisco was just a start-up. However, it began losing money and

mindshare during the dotcom crash, exiting from the high-end router market in

2000 and dwindling in employee strength to a few thousand from a high of about

12,000.

Then in 2003, 3Com joined hands with Huawei to form H3C with an

objective of re-entering the market for large LAN switches and WAN routers.

Huawei's exit from the joint venture signals a turnaround for 3Com's

strategy in addressing the enterprise market especially in the Chinese market.

The new chief executive Edgar Masri is determined to put the

firm back on the map with an aggressive growth plan in Asia Pacific region and

globally.

3Com believes that the networking market is commoditizing and

that, with companies such as DLink, Linksys, and Netgear now selling to SMBs as

well as consumers, even Cisco will feel the pressure.

3Com is playing hard at elbowing out its competitors by

leveraging Open Source Networking (OSN). This will offer its customers the

benefit of choosing 'best of breeds' solutions that can be customized.

"No single vendor has the best or most innovative solution. But, OSN gives

us freedom to innovate and customize as per customers needs, enabling faster

development and deployment of services and huge cost savings," informs

Peter Chai, vice president and general manager, (Asia Pacific), 3Com.

India Opportunity



3Com's presence in India is too small to be counted in the top five
enterprise networking companies, but the company's focus is sharp on India.

"We are already leveraging the immense talent pool in India and have two

design centers with 160 engineers," informs Masri.

"We find the Indian market fairly unexploited and it gives

us an immense scope. India is still building its infrastructure and as a market

it is currently behind China by 3-4 years," Masri adds.

India presents 3Com a wide scope in the enterprise networking

market especially for gigabit switches, router, IP telephony, and other wireless

networking products. Some of the key clients that 3Com has bagged in India

include carriers like BSNL, MTNL, SEBI, and Siemens.

Continuing with the integration process, 3Com is keen on

strengthening its channel partnership program in India. To start with, it is

planning an event to reach out to its customers and channel partners in Goa

later this year. Currently, the company is focusing on launching its combined

branding exercise in India.

Branding will be the Key



"We have made China by choice and are now focusing on tiered branding
leveraging both 3Com and H3C's strengths," says Masri. The 3Com and H3C

sales and marketing organizations are now one team with an integrated

go-to-market strategy and a broader product portfolio in the region.

Building up the brand, which had taken a beating in the past

years, 3Com is keen on going for a tiered branding. At the small and medium

business end where 3Com has been strong and comparatively well known, it is

sticking to the 3Com brand. At the higher level, specifically with system

integrators and service providers, where H3C is the source of the product, it is

likely to stick to using H3C as the brand. It is for the mid-range that the

company is chalking out its branding strategy.

To regain its number two position in networking, 3Com has

realized that to be taken seriously it has to go back and build a competitive

product line for the enterprise.

Malovika Rao, the author was hosted in Singapore.



malovikar@cybermedia.co.in