3Com and Huawei target Cisco in joint venture

Vendor prepares Cisco rematch by announcing re-entry into enterprise market

Vendor 3Com is preparing a rematch with Cisco by announcing its re-entry into the enterprise market.

To this end it has invested $160m (£102m), plus assets and IP licences, in a joint venture with Chinese networking vendor Huawei.

The move sees the networking giant re-embrace the enterprise market after conceding it to Cisco in early 2000.

Huawei will contribute its enterprise networking business resources, such as its local are network switches, routers, licences, engineering capabilities, sales and marketing resources as well as personnel.

3Com will sell the jointly developed products under its own brand worldwide. The exception will be the Chinese and Japanese markets, where products will be sold under the Huawei-3Com brand.

"This broadens our enterprise products and allows us to develop far broader enterprise solutions than has been possible in the past," said Buddie Ceronie, regional director at 3Com.

"Cisco will be the main competitor to this joint venture."

3Com was criticised by partners in 2000 when it pulled out of the enterprise market after failing to break Cisco's dominance.

To repair damaged channel relationships following this period, the vendor has been rebuilding steadily the confidence of its reseller partners with its 100 per cent indirect sales focus.

Huawei is undergoing a legal wrangle with Cisco after the vendor claimed it copied sections of its source code and technical documentation.

John Finney, sales and marketing director UK at Huawei, said it will file its official response to the allegations today.

Kevin Vine, director of networking services at Ingram Micro UK, claimed that despite 3Com's decision to pull out of the enterprise market in 2000, he has no fears about taking on the joint products.

"There is a real margin opportunity for VARs, with 3Com's branding and Huawei's lower prices," he said.

In separate news Cisco, which recently bought back $5bn of its common stock, has acquired Linksys Group for about $500m, a move that will give it greater focus on the small office/home office (SoHo) market.

John Chambers, Cisco's chief executive, said last week that Linksys will continue to focus on the consumer and SoHo markets and keep its own brand.

Corporate Linksys products, however, will be sold through the Cisco channel, which means Linksys will not develop its own channel programmes, he said.

"This acquisition is an example of Cisco's strategy to broaden its portfolio of network solutions into high growth markets such as wireless, voice over IP and storage area networks," Chambers said.

Victor Tsao, chief executive of Linksys, said the firm's own resellers will be integrated into Cisco's channel programmes.

Tsao said Linksys will be treated as an independent division of Cisco - the first time Cisco, which has bought more than 80 firms, has chosen to do that.