An Uphill Climb for 3Com

Arthur Cole

Now that a little time has gone by, analysts have begun to digest the implications of the 3Com buyout, with the general consensus being that it could ultimately prove beneficial to enterprise users, but it won't hurt to wait and see how things shake out.

 

The company announced last week that it was being acquired by private equity firm Bain Capital for $2.2 billion in a three-way deal that would hand over a percentage of the company to 3Com's former Chinese partner, Huawei Technology. The level of Huawei's commitment is still unknown, which has some analysts wondering whether the company has a hand-on interest, or simply a financial stake.

 

Gartner analyst Mark Fabbi is quoted here saying that buyers probably shouldn't expect to see any across-the-board changes in pricing for 3Com equipment, but the firm may be hungry to cut special deals in order to boost its relatively dismal market share vs. market leader Cisco.

 

Still, since buyouts and corporate takeovers can be messy, with the buyer quite often looking to trim expenses to service the debt load, established product lines can sometimes find themselves cut loose without warning. Current Analysis' Steve Schuchart says 3Com didn't have the best track record at product support to begin with, leaving many customers in the lurch when it abandoned the large enterprise core switch market earlier in the decade.

 

Meanwhile, there is no lack of options when it comes to switching equipment. Cisco still dominates with more than 70 percent of the market according to some estimates. But major enterprise players like HP and Nortel are making a serious run. HP's new ProCurve 8212zl switch is the last piece of a core-to-edge infrastructure built around the company's ProVision network chipset.


 

Smaller firms are also getting into the act. D-Link just came out with a new set of high port density Layer 3 core switches. The DES-7200 series offers advanced features like routing information and border gateway protocols, as well as a full set of Spanning Tree Protocols.

 

The problem with selecting a core switch is that it's such a vital piece of enterprise equipment that most organizations can't afford to blow their budgets on something that doesn't do the job or doesn't get full support from the vendor. The new 3Com is likely to jump through extra hoops to prove that it's here to stay, but trust doesn't come cheap. With so many choices around these days, they've got their work cut out for them.



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