3Com finding an opportunity in recession
Strained companies turn to cheaper network switches
Ron Sege, president of 3Com Corp. in Marlborough, believes that the global recession has provided his company an extraordinary opportunity to become a major international supplier of high-end data networking gear, a market presently dominated by mighty Cisco Systems Inc.
"The recession is creating demand for what we have to offer," said Sege. Designed and built in China, 3Com's line of less-expensive data network switches, called H3C, are a good option for cash-strapped corporations looking to trim data management budgets, he said.
3Com was the first company to sell the now-universal Ethernet data networking technology and became a world leader in networking during the 1990s. But staggered by the high-tech recession of 2001-2002, 3Com shifted most of its development efforts to H3C, a joint venture in China with Huawei Technologies. H3C created a line of cheap, energy-efficient switches that companies can use to join many subnetworks into a single large data network.
3Com has since bought complete ownership of H3C. Last year, Huawei tried to acquire 3Com, but US regulators quashed the deal over concerns about Huawei's ties to the Chinese military. In the aftermath, 3Com hired Chinese-American Robert Mao as its new chief executive and continued to focus on China, where H3C products have gained about one-third of the enterprise switching market.
Now 3Com is introducing H3C products worldwide, betting that their low cost and high quality will appeal to customers seeking an alternative to Cisco gear.
It's not 3Com's first foray into the high-end data switching market. "They have tried this before with very limited success," said Zeus Kerravala, senior vice president of enterprise research at Yankee Group in Boston.
In 2000, 3Com abandoned its CoreBuilder line of switches, infuriating customers who'd come to rely on them. The company also made earlier, unsuccessful attempts to sell H3C hardware in the United States.
One reason for 3Com's earlier problems, said Kerravala, was a lack of depth in its product line, which he said is no longer an issue. "Their product line now is as broad as anyone's, including Cisco," he said.
Dave Foss, assistant director for information technology services at the Massachusetts Institute of Technology in Cambridge, has tested an H3C switch at the data center for the school's electronics laboratory. "It's MIT, and I have a need for speed," said Foss. "It's got to be the fastest, most reliable thing I could get."
The H3C switch has performed so well, Foss has ordered 100 more. "MIT is like everybody else," said Foss. "Our endowment is down. People are looking to save money."
The H3C switch is priced at $10,000, compared to around $20,000 for a similar Cisco product. In addition, 3Com offers a lifetime warranty on its switches, with free repair or replacement of defective products. "Just that alone is going to save me a ton of money," Foss said.
Kerravala said that although the recession is a good opportunity for 3Com to reestablish itself as a supplier to corporate data centers, because of its previous stumbles, customers won't cut the company any slack. "This is their last, best chance," he said.
Hiawatha Bray can be reached at bray@globe.com. 