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3Com weaves around Cisco into China

The imminent settlement of a patent lawsuit between Cisco and its Chinese rival, Huawei, clears a bigger path for networking company 3Com to enter China's hot telecom market.

3Com has found its way around Cisco Systems and into China.

The imminent settlement of a lawsuit between Cisco and Huawei Technologies means that Marlborough, Mass.-based 3Com can rev up the supply lines to China and focus on developing new equipment with Huawei, according to spokeswoman Karin Bakis.

In March, Huawei, China's leading telephone equipment maker, agreed to sell 3Com's voice over Internet Protocol (VoIP) phone equipment and broadband network gear to the country's growing number of private businesses.

But a patent lawsuit that Cisco filed against Huawei added a level of uncertainty to the deal. 3Com intervened because it felt that "its reputation was on the line," even though the suit targeted Huawei gear, said 3Com general counsel Mark Michael.

3Com's suddenly easier path to China won't end Cisco's dominance of the market for routers and switches, which are used to direct Internet traffic. However, 3Com could steal customers from Dell and other secondary companies, executives believe.

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"One of the main reasons we originally did the deal with Huawei was to tap into the largest enterprise networking market, which is China," Bakis added.

But the proposed settlement of the litigation in U.S. District Court for the Eastern District of Texas still faces some challenges. For one thing, the terms of the settlement, which are expected shortly, have to be filed. The next step is for an already selected "independent expert" to review product changes that Huawei said it has already voluntarily made to address Cisco's concerns, according to a Cisco spokeswoman.

That process should take about 60 days, Michael said. "The joint venture is proceeding as per plans," he said.