3Com works on Net strategy to boost sales
The networking firm is creating a company that offers wireless Internet service for one main reason, analysts say: to sell more of its PalmPilots.
3Com today joins a growing number of tech firms, including Microsoft and Oracle, that are diving into the emerging wireless market in hopes of selling more of their core technology--whether it be operating systems, handheld computing devices, or database services.
"The goal is to ultimately grow what we call the Palm economy," said Mike Dolbec, 3Com's vice president of business development.
As reported earlier, 3Com 
today paired up with Aether Technologies to form OpenSky, a new company that will offer wireless Net service for cell phones, PalmPilots, and other handheld devices. Aether makes software used to run wireless data networks.
OpenSky will work with telecommunications carriers to offer users access to email and corporate data over the Internet, as well as sponsor a portal that will give users access to news, stock quotes, and e-commerce sites.
Punk Ziegel analyst Michael Davies said 3Com's initiative is a smart one, as the wireless device market is exploding. Offering new functions for the devices, like Internet services, may entice businesses and consumers to buy more products, he said.
"They're leveraging the usability of the PalmPilot and other handhelds into more exciting areas, such as unified messaging," Davies said. "This broadens the market opportunity for the products."
Dataquest analyst Scott Miller said it will take a few years before wireless Internet services become popular. The new generation of cell phones that can handle Net service won't be available until next year, he said. And it will take a few years for the cost of handheld devices--as well as monthly subscription prices for the Net services--to go down.
"It'll take some time for the prices to hit the mainstream," Miller said.
Analysts believe 3Com's jump into the wireless Net fray is a direct response to moves by Microsoft, which competes with 3Com in the handheld market with its Windows CE operating system.
In November, Microsoft and Qualcomm created a company called Wireless Knowledge. Similar to OpenSky, their goal is allow wireless carriers--including AirTouch Communications, GTE Wireless, and Sprint PCS--to offer data services to businesses. For example, an employee with a cellular phone or Windows CE-based handheld device would be able to hook into the Internet or corporate network over Microsoft software.
"As we move along the convergence between the voice world and data world and unified messaging, the players that can best bring that to consumers will be 3Com and Microsoft, given their position with the Palm and CE operating systems," Davies said.
But 3Com's Dolbec said OpenSky is different from Wireless Knowledge, as OpenSky is going after carriers as well as end-users, while Wireless Knowledge is only targeting the carrier market.
Separately, Oracle is working to launch a similar wireless service called Project Panama that would use the Oracle 8i Lite mobile database.
Oracle executives in the past have said they were discussing a potential partnership with 3Com in a move to unify their efforts. 3Com's Dolbec today said OpenSky may consider teaming with Oracle in the wireless Net space.
Dolbec said OpenSky will announce partnerships with carriers later this summer and should roll out services throughout most of the United States by the fourth quarter.
Last month, 3Com entered the wireless Net service market when it introduced its new Palm VII Palm.net service. The subscription-based Internet service gives users news and information, such as stock quotes from E*Trade and sports scores from ESPN.
OpenSky will use 3Com's "Web-clipping" technology, which pares down the information from Web sites and fits into the PalmPilot's small screen.