3Com has pulled out of the storage area network (San) business, weeks after announcing its backing for the emerging sector.
At the beginning of the year, Eric Benhamou, chief executive of 3Com, said Sans would be one of the key growth drivers for the underperforming networking firm.
Two weeks ago, 3Com announced a partnership with network storage company Storagetek. The vendors planned to combine their San software, hardware and professional services.
But last week, 3Com confirmed that it had pulled out of the San sector and would be refocusing its efforts on its most profitable lines of business.
Sans enable data storage, sharing and movement, on multiple storage hosts using a centralised storage management system.
Bruce Clafin, president of 3Com, said: '3Com is making a difficult but good business decision. And now is the right time to take these actions, before more money is invested and before product reaches our customers. The decision enables 3Com to shift resources and talents into areas expected to yield the greatest returns.'
3Com will be left with three business divisions of home networking, IP telephony and Palm Pilot handheld computers.
A prediction of modest sales growth for its fourth-quarter left 3Com with little option but to cull the San project as it seeks to return to greater profitability by refocusing on core areas.
Analysts claimed 3Com's decision to exit the San market would help it focus on other areas, but the move alone was insufficient and the vendor remains unfocused.
Neil Rickard, networking research director at Gartner Group, said: 'We don't believe 3Com can survive long term, based on status quo. It needs to change.'
The networking market is being driven by companies such as Nortel and Cisco that offer end-to-end products, said Rickard. Through its relationship with Siemens, 3Com has all the required pieces, but the relationship is fragile and needs strengthening, he said.
Rickard added that while Sans and Lans use similar technology, they are very different lines of business for vendors. 'Even if the technology bears a similarity, they have a different set of buyers looking for different criteria that is too far away from 3Com's home ground.'
Analysts at IDC estimated that Sans will account for 37 per cent of all external storage spending by 2002, creating a San market of about $11 billion.
3Com first entered the San market in November 1998 with an equity investment in San Jose company Gadzoox Networks.
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