3Com launches WAN routers based on Huawei's technology

Networking vendor 3Com has introduced its first WAN router line. The new products are made by Chinese vendor Huawei Technologies, a move that highlights 3Com's increasing reliance on business partners and operations in Southeast Asia for technology development and product manufacturing.

The rollout of the Router 5000 series for mid-size users and branch offices of larger companies follows 3Com's announcement earlier this month that it plans to outsource all manufacturing of its enterprise networking products.

3Com, which will lay off about 1000 of its 3100 workers as a result of the outsourcing decision, also said it was shifting development of low-end volume products to a new facility in Taiwan.

The company is trying to regain its position as a leading vendor of corporate networking equipment after temporarily abandoning that market three years ago. But it faces stiff competition from bigger rivals such as Cisco Systems. It is also trying to rebound from losses totalling $US283.8 million in its last fiscal year and $US106 million in its fiscal 2004 first quarter, that ended on August 29.

Several 3Com users last week said they were generally unconcerned about the restructuring program.

They hoped the ongoing changes would help strengthen the vendor.

The users also welcomed the arrival of the Router 5000 family and said they trusted the pairing between 3Com and Huawei. "I want [3Com] to do well, because we want to use them," chief information officer at Prudential Northwest Properties, said Sean McRae, said.

McRae plans to look closely at the new router line as a potential alternative to Cisco's products.

"From a cost perspective, it sounds terrific," he said. "The fact that Huawei builds in China is not a concern as much, since we would have support from 3Com."

Director of technology at the Ventura Unified School District, Ted Malos, said he also would evaluate the Huawei-built routers to see if they would integrate easily into his network, which connected 27 school sites and included IP phones and other equipment made by 3Com.

The 5000 series "sounds like a Cisco replacement" because of its low cost and promises of high reliability, Malos said.

3Com said CEO, Bruce Claflin, and other top executives weren't available last week to discuss the company's strategy.

Earlier, Claflin highlighted the company's plan to set up a joint venture with China-based Huawei and a voice-over-IP deal that it announced last month with Aspect Communications in California.

"While it would be premature to suggest an industry or company turnaround, we are encouraged," Claflin said.

3Com began its new fiscal year "with an expanded set of products [and] an enhanced set of partners", he said.

Despite its losses, 3Com still has $US1.5 billion in cash. And the company's recent moves should help make it stronger over time, The Yankee Group analyst, Zeus Kerravala, said.

Kerravala said that Huawei "makes decent products" and that shifting some of 3Com's engineering work to China was a sensible plan.

"You can save a lot by replacing a $US150,000 engineer in the US with a $US25,000 engineer in China," he said.