Commentary: 3Com changes course to tackle other growth areas

See news story: Competitors fight for 3Com's discarded customers

By Mark Fabbi

3Com's abandoning of the large enterprise market to focus primarily on the small and midsize enterprise market is, in effect, an admission that it cannot successfully compete with Cisco Systems and Nortel Networks in that market.

Abandoning large enterprise products will allow 3Com to cut expenses and focus resources on markets in which it has greater growth opportunities and a historical strength. The moves are part of a continuing trend by many networking suppliers to shed low-growth businesses, focus on their strengths and force the financial markets to evaluate key portions of their businesses.

3Com has a number of customers that rely on products that are being discontinued. The company has expanded its partnership with Extreme Networks to help smooth the transition and to offer its customers a migration plan supported by 3Com. Key to this migration will be continuity of support and the actual execution of the partnership.

The agreement between Extreme and 3Com calls for 3Com's sales and engineering teams to be transferred to Extreme to provide continuity in relationships. However, early Gartner client feedback indicates that Extreme is more interested in turning over the 3Com installed base than working with 3Com and its customers to ensure a more orderly transition.

Although the Extreme products provide a viable upgrade for campus Ethernet solutions, large enterprises with an installed base of PathBuilder, NetBuilder and ATM products will likely be better served by considering other providers.

By year-end 2001, Gartner believes that Extreme will capture no more than 10 percent of current 3Com large enterprise accounts (0.6 probability). Although this represents a small percentage of Extreme's opportunity, it nonetheless will provide Extreme with another avenue to grow revenue and strengthen its position in the campus LAN market.

However, not all 3Com customers have the luxury of waiting to migrate. Those that had planned to add the N+1st CoreBuilder 9000 by mid-2000 must focus on formulating a migration strategy based on products that are shipping.

When drafting a short list of replacement suppliers, these enterprises should rely heavily on the original decision criteria. Network managers should set a goal to completely replace their installed base of discontinued 3Com products within 18 months.

Although 3Com has pledged a five-year support plan for all discontinued products to soften the impact on affected enterprises, 3Com no longer intends to pursue the high-end segment of the large enterprise market. Therefore, it is unrealistic to assume that 3Com will have the resources and motivation to provide adequate service for discontinued products beyond the 18-month time frame.

3Com customers should not panic and allow themselves to accept artificial deadlines from suppliers attempting to win control of their networks. CoreBuilder products will not suddenly stop working after these deadlines pass. Enterprises must focus on making technology decisions that match their risk profile and the needs of their business.

When CoreBuilder customers are ready to switch, there will be no shortage of suppliers waiting to offer special incentive deals.

Entire contents, Copyright © 2000 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.