3Com Announces Plans to Accelerate Growth; Sets leadership goals on four high growth technologies: IP telephony, broadband access, wireless access and web-based solutions - Brief Article

Cambridge Telcom Report, March 27, 2000

Following the initial public offering of Palm, Inc., 3Com Corporation Monday announced it is taking the next steps to complete its strategic transformation by sharpening its focus on high growth markets, technologies and products.

3Com will now concentrate all its resources on three distinct networking markets: consumers, commercial customers (particularly small and medium-sized locations), and network service providers. For these customers 3Com delivers seamless, rich connectivity, anytime anywhere, leveraging its leadership in the following emerging high-growth technologies: IP telephony, broadband access, wireless access and web-based solutions.

"3Com has historically been at the forefront of major network technology changes," said Eric Benhamou, 3Com's chairman and chief executive officer. "Today's announcements are consistent with that tradition. We're focusing on markets where we have established a leadership position, while making strategic investments in new technologies and partnering with companies that strengthen our offerings. In addition, we're transitioning out of businesses that are no longer strategic to 3Com's future.

"3Com has earned an early lead in these emerging technologies with number one positions in residential broadband products, small business networking, LAN telephony, total Ethernet connectivity, remote access and wireless CDMA solutions for network service providers," added Benhamou. "I intend this to be a new 3Com that will play a major role in the Internet economy. We have the energy and enthusiasm of a start-up, an industry leading patent portfolio, a distribution network second to none, US$3 billion in cash, and 21 years of experience. This is an extremely strong combination."

Consumer Market: Focused on Broadband and Wireless In the consumer market, 3Com will improve people's quality of life through improved personal productivity, convenience and entertainment for mobile professionals and consumers. 3Com already has a wide product portfolio for broadband access to the Internet as well as home networks. To better focus on serving consumers and capitalize on high-growth areas in the consumer market, 3Com is transitioning out of its existing analog modem business. To do so, 3Com intends to form a new company with Accton and NatSteel Electronics, and will sell its analog desktop and PC Card modem business to this new company. The new company will research, design, market and sell Internet access products, including U.S. Robotics-branded analog modems.

Commercial Market: New Alliances, New Network Appliances, New Network Applications, New Products 3Com's commercial products targeted at small and medium sized locations offer rich connectivity, while being simple to buy and easy to use. To expand on these strengths, 3Com is announcing alliances with Inktomi for web-caching, F5 for load balancing, and Sonic Wall for firewall capabilities. These alliances will create a new category of "network appliances," function-rich products that help secure and accelerate the web for 3Com's commercial customers.

3Com has also forged an alliance with customer relationship management application leader Apropos Technology to provide customer care and call center solutions based on LAN Telephony. 3Com will integrate the Apropos Version 4 Total Interaction Management Systems with the 3Com NBX 100 LAN Telephony Communications System.

3Com Monday also announced a partnership to bring the benefits of LAN telephony to wireless phone users. Through a new alliance, 3Com will embed its NBX LAN Telephony technology into Symbol Technologies wireless phones to give business users the ability to access NBX LAN Telephony services campus-wide.

Finally, 3Com is making an equity investment in CAIS to create high-speed Internet access solutions initially targeted at the hospitality industry in the emerging visitors-based networking market.

To sharpen 3Com's focus on these opportunities, it will transition out of its large enterprise LAN core business. 3Com is discontinuing the CoreBuilder product line with last customer shipments scheduled for June 30. 3Com is announcing an expansion of its alliance with Extreme Networks to provide high end switching products and a migration path for existing CoreBuilder customers. 3Com will continue to provide level 1, 2 and 3 support and sustaining engineering services. At the same time, the alliance with Extreme Networks will provide for cross sales and marketing opportunities between the two companies. 3Com is also transitioning out of its large enterprise WAN core business, announcing that the last shipments for its PathBuilder and NetBuilder product lines will occur June 30, 2000. Customers for all discontinued products will receive service and support for a period of up to five years.

3Com announced the Switch 4000 line of backbone networking systems. These pre-configured systems are specifically designed to provide small and medium locations with easy-to-use, high density LAN backbone switching. 3Com's new Switch 4000 is a simple-to-deploy "backbone-in-a-box" solutions include management, switching fabric, power supply and the associated I/O modules. 3Com also introduced the SuperStack II Switch 9100, that incorporates the emerging Gigabit-over-Copper high speed LAN technology.