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3Com becomes two pronged

3Com becomes two pronged

After lukewarm sales of its high-end networking products, 3Com Australia turned heads in the channel last week by drastically narrowing its product line.

The company will discontinue its range of high-level LAN and WAN switches and routers, narrowing its focus on the SME (small-to-medium enterprise) and carrier markets.

The channel is still coming to terms with the impact of the refocus just weeks after it officially announced Ingram Micro, Tech Pacific and LAN Systems as its master distributors in Australia.

However, initial reports suggest it will provide resellers with the opportunity to migrate enterprise customers to alternative networking vendors.

NetStar, which claims to have the largest installed base of 3Com equipment, was surprised to learn about the changes in the media first, despite the fact industry speculation has long mooted either an enterprise market exit or equipment sale.

"What has disappointed me is that I wasn't taken into its confidence earlier than the public," Kent Brooks, NetStar's managing director, said.

The opportunity for NetStar now, Brooks stated, was that the company can continue to support 3Com enterprise customers and offer migration paths, typically to its close buddies Nortel Networks and Cisco.

In fact, he predicts 3Com will find it difficult to retain its enterprise support engineers and said NetStar is in negotiations with the vendor to offer more of its own engineers to fill the support gaps.

"We're going to have to readjust expectations in our customer base," he said of what users can expect from 3Com in the future.

Nick Verykios, chief marketing officer at value-added distributor LAN Systems, said the first thing it did following the announcement was look at the impact on its resellers and their customers.

"Over the last couple of days we've been working with 3Com, working out a rollout schedule." He said this included working on some transition plans and looking at current availability of stock.

Verykios said Lan Systems had also been working with its other vendors to approach reseller's customers' transitions from that perspective.

"3Com has decided, like so many other vendors, to get out of a particular piece of business that they don't consider to be their core going forward."

He said the hardware which 3Com was discontinuing performed "a function" and that function could be substituted with hardware from other vendors. "I think that alone has allowed us to act quickly."

Issues have included short-term projects, new implementations and tenders. "It's just being able to provide our resellers with the ability to provide an alternative solution [to their customers]."

Verykios believes 3Com's ann-ouncement also provides resellers with an opportunity to emphasise to their customers the services they are providing. "Those kinds of resellers are the ones that are going to win on this," he said. ". . . start to use these as solutions going forward and they can actually build that into their maintenance agreements, " Verykios said.

David Higgins, category manager for networking at IT distributor Tech Pacific, believes 3Com's announcement is a good decision as it will allow 3Com to focus on one of its key areas of strength. Higgins also believes the move will be good for resellers. "The 3Com products are still going to be available for them, but this time they'll have a very focused 3Com behind them."

Archie Wilson, managing director, 3Com Australia and New Zealand, said it expected to retain all its resellers. He said he had been doing a lot of customer calls in the days following 3Com's announcement. "The one that comes through has been the renewed focus on 3Com as a LAN switching vendor.

"I'd expect that our switching business flourishes even more after this because you'll find the market is going to definitely go back to the two-vendor policy," Wilson said. "I think the days of the one vendor policy are gone."

He said 3Com had been getting the news of the changes out to its resellers through its partner Web site and 3Com account reps had been contacting the top-tier partners they dealt with. In addition, 3Com has its partner conference in Penang next month.

"I think it has renewed the focus on the newer technologies," Wilson said. "It's really hyped the awareness of a lot of the new stuff we're doing." Wilson uses the example of its LAN telephony products where he said it had a "deluge of resellers" wanting to sell the product.

"These new technologies are where our resellers are going to be able to get into new market segments they're not currently in."

3Com last week also posted quarterly global revenues that managing director for Wilson described as "slightly up from this time last year". However, he said that while the company's carrier and SME earnings had been "up" since last year, the earnings attributed to high-end networking systems were "down year on year.

"The top line in the company is still not growing," he said.


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