EDS to resell 3Com enterprise networking products

EDS to resell 3Com enterprise networking products

Electronic Data Systems (EDS) will resell 3Com equipment, a move intended to offer EDS clients another choice in enterprise networking products.

EDS, a provider of IT services, already has an alliance with 3Com rival Cisco Systems, the leader in the enterprise networking market. It will resell 3Com switches, routers and Voice over Internet Protocol (VoIP) enterprise networking products. The agreement's scope is global but will initially be rolled out in the US and UK.

The first two vertical markets to be targeted will be the retail and finance industries; other verticals will be added later.

The agreement with 3Com rounds out the EDS enterprise networking offerings at the low end and middle range, an EDS spokesman, Mark Southland, said.

"It diversifies EDS' portfolio and what we can provide to our clients," he said. "We're vendor-neutral in every aspect. We engage with multiple vendors. That's what our clients expect from us."

The agreement should not adversely affect EDS' sales of Cisco equipment, which were growing quickly and consistently, he said.

"In reality, Cisco's market share with EDS may go down slightly [as a result of the 3Com deal], but because we're growing our Cisco sales so fast, the total amount of money going to Cisco from EDS from a reseller standpoint is increasing very significantly," he said. "We're on a growth pattern that allows both (Cisco and 3Com) to coexist without any significant issue."

Moreover, EDS' relationship with Cisco is much tighter than its relationship with 3Com, Southland said.

EDS has six alliance partners, one of which was Cisco, he said.

The agreement with 3Com was a less intense relationship, best described as a "reseller teaming" agreement of the type EDS had with many other vendors, he said.

"The relationship with 3Com shouldn't be considered much of a threat to our Cisco alliance," Southland said.

The EDS deal was the first global agreement 3Com is doing with a tier-one IT services provider, 3Com spokesperson, Karin Bakis, said.

"This is an extremely big deal for 3Com," she said.

3Com feels it has a strong reseller network targeting small and medium-size companies.

The EDS agreement gave the company a real entrance into the larger Fortune 500 enterprise market, Bakis said.

3Com expected to sign similar deals with other IT services providers, she said.

EDS is the world's second largest IT services provider in terms of revenue, behind IBM's Global Services unit. Other large IT services providers include Accenture, BearingPoint, Computer Sciences and HPd's services unit.

As part of its push to take on Cisco in the enterprise networking space, 3Com recently formed a joint venture with Huawei Technologies, based in Shenzhen, China, to develop and sell enterprise networking products. Huawei-3Com, based in Hong Kong with principal operations in Hangzhou, China, will market products such as routers and LAN switches in China and Japan, while 3Com will sell them elsewhere in the world. 3Com closed its first fiscal 2004 quarter on August 29 with a net loss of $US106 million, larger than the net loss of $US98 million recorded in the first fiscal quarter of 2003.

Revenue came in at $US162 million, down from $US305 million in the first fiscal quarter of 2003.

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