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H3C buy-out could open up new target segments for 3Com

H3C buy-out could open up new target segments for 3Com

$US882m deal prompts expansion into the enterprise market

Networking vendor, 3Com, has flagged broader market penetration as one of the big changes brought about by its $US882 million buyout of Huawei Technologies' share in joint venture, Huawei-3Com (H3C).

As part of the new agreement, 3Com will drop the Huawei brand. However, the vendor has opted to maintain the abbreviation, H3C, in a bid to maintain brand recognition in the Chinese and Japanese enterprise networking markets.

With its manufacturing facilities and about 3000 research and development engineers in China, H3C was expected to provide opportunities to add low-cost products into 3Com's existing offering, vice-president and general manager of 3Com Asia-Pacific, Peter Chai, said.

H3C will also help broaden its enterprise sales strategy. Locally, 3Com is focused on the education and government sectors, which constitute about 40 per cent of its business.

"We intend to put a lot more resources into Australia, and look at new verticals," Chai said. He highlighted manufacturing as a possible target.

As a result of the acquisition, 3Com and H3C's sales and marketing teams have merged. A local country manager has also been appointed to manage the combined team.

The additional resources would enable the company to pursue more direct-touch sales, Chai said, especially with large enterprises which tended to be particular about which integrators they work with.

Meanwhile, 3Com and H3C will continue to look to the channel for most of its sales. Chai said it would work closely with existing partners through regular integrated branding initiatives such as partner and customer seminars.

"We will still be very much a channel company," he said. "Gold and silver resellers will be our main channel to market ... we've focused a lot of our marketing resources into partners who are deemed to be committed and can provide sales and technical support for our products."

The buyout is the third and final chapter of 3Com's partnership with the Chinese telecommunications equipment provider. The joint venture was launched in November 2003. In January last year, 3Com took a 51 per cent majority share of H3C under a $US28 million deal.


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