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3Com reconnects with big business

The company inks a deal with EDS to sell networking equipment to large businesses, a market it abandoned in 2000.

3Com is once again selling networking equipment to large businesses, a market it abandoned in 2000.

The networking gear maker announced Tuesday that Electronic Data Systems, the second-largest computer systems integrator, will be offering 3Com Internet phone equipment, switches and routers to business customers in the United Kingdom and United States. Initially, EDS will target giant retail and financial organizations, but it later plans to expand into additional markets and countries. Financial terms of the deal were not disclosed.

Nearly three years ago, 3Com ceded the large corporate networking equipment industry to rival Cisco Systems, which in the last two years has continued to dominate the market, shipping 2 million Internet phones. 3Com said it's making the move back into the market because spending by communications providers, some of its biggest customers, continues to be slow.

The EDS deal highlights a new challenge for Cisco. EDS and market leader IBM once almost exclusively relied on Cisco for networking equipment to outfit their large corporate clientele. "We think this marks an interesting milestone in the changing competitive landscape," a 3Com representative said. Cisco representatives did not return a call seeking comment.

3Com said that EDS also plans to offer networking equipment that 3Com is making through a joint venture with Chinese networking hardware maker Huawei Technologies, which is known for equipment. Joe Warnement, president of EDS communications services, said equipment ownership costs are an "increasingly key decision-making factor facing executive-level clients."