The-TIP | 3Com in 3-Legged Race

3Com in 3-Legged Race for Enterprise Market (Oct. 1-14)

3Com posted a sharply lower quarterly net loss from last year, but revenue from telco carriers continued to plummet by 22% and the company missed Wall Street expectations. While lauded by some for cutting operating expenses nearly in half in a year, 3Com president and CEO Bruce Caflin is fighting for his corporate identity and survival. Like a kid discarding of a few pieces of stale Halloween candy, 3Com publicly dropped the enterprise market in 2000, opting instead for the sweeter and more plentiful carrier business. Now 3Com’s chief is desperately trying to dig the enterprise candy out of the trash, offering incentives and price breaks to sweeten the pot for enterprise channel and customers. There is no doubt that Cisco is the big bully on the block with gobs of goodies – the battle is for #2.

In a recent promotion called "Margin to Win", 3Com is offering a 10% rebate on the last negotiated price of LAN switching products from competitors such as Enterasys. The company faces hefty market challenges from alienated resellers and strong competing network vendors at the high and low end that are putting the squeeze on 3Com. "With Cisco dominating the high end of the networking hardware market and vendors such as NetGear, Linksys, and D-Link biting away at the low end, 3Com stands on shaky ground," said Jason Smolek, an IDC analyst. "Even in the mid-tier market, companies want modular solutions, and HP has them. I think HP will become the #2 networking player," he predicted.

And then there’s Dell pushing its way into the networking market with low-price alternatives. 3Com just announced it’s dropping Dell as an authorized reseller, clearly threatened by the newcomer. "[Dell] must be selling something to somebody, but they’re not going to be selling 3Com product," said Caflin.