In the hotly contested market for 10/100-mbps Ethernet-based adapter cards and low-end switching and hub hardware, these two industry giants are at war. At stake is dominance of the connections from PC systems to networks.
The latest numbers from the Dell'Oro Group research firm suggest that while 3Com (COMS) leads in network interface cards, Intel (INTC) is rapidly gaining momentum, and a market shift to 100-mbps Ethernet connections is now readily apparent.
"I think 3Com will probably continue to be neck and neck with Intel for a while," said Tam Dell'Oro, founder of the Dell'Oro Group.
Intel has seen nearly 50 percent quarter-to-quarter growth, in sales of network interface cards, closing in on 3Com's No. 1 position in the market, according to Dell'Oro. Intel's gains have forced deep price cuts in the 10/100-mbps Ethernet card market, with suggested prices hovering at or below $100 per card for a pack of 20. Actual retail prices are lower, according to the company. (Intel is an investor in CNET: The Computer Network.)
Although temporarily stung by the rapid price drops, 3Com has regained steam and kept up with the price fluctuations, sacrificing margins for market share in a segment that gives the networking powerhouse nearly 40 percent of its revenue (pre-U.S. Robotics merger).
For the just-completed second quarter of this year, 3Com garnered 47 percent of the market for network interface cards vs. nearly 39 percent for Intel. That represents a 5 percent quarterly jump for the microprocessor kingpin. (3Com's share dropped 10 percentage points.) Surges from the likes of Hewlett-Packard, Standard Microsystems, and Compaq Computer accounted for a portion of 3Com's share drop.
"Fast Ethernet growth is blowing by everything out there," said Mark Christensen, vice president of Intel's Internet and communications group and general manager for its networking products division. "The switch over is happening very rapidly. I don't see anything stopping it now. A year from now, everything will be enabled with Fast Ethernet."
For Ethernet-based hubs and switches, 3Com also retains a lead in several categories, according to the Dell'Oro data, despite serious efforts from the Intel, Compaq, as well as more traditional networking giants like Bay Networks and Cisco Systems to expand their presence in the price-conscious sector. 3Com retains a lead in managed 10-mbps hubs, 100-mbps shared hubs, and 10-mbps desktop switches.
Intel claims it has seen 30 to 35 percent quarterly growth in its Fast Ethernet hub line, based on numbers compiled by In-Stat. The chip company hopes this is an indication that its recent "avalanche" strategy to expand its presence in the Ethernet-based networking market may be paying dividends.
3Com has a slew of other offerings up its sleeve for this fall, taking many of its Ethernet customers to next-generation 1,000-mbps. A full line of hubs, switches, routers, and NICs for server connections soon will roll out, according to officials.
"As the workgroups move to Fast Ethernet, faster technologies will move to the backbone and server connections," said David Sandford, product marketing manager for the interface products group at 3Com.
"We're clearly not a single product or single solution company," he said.