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3Com to lock horns with Cisco outside China

Source :Reuters          update : 2009-06-08

3Com Corp (COMS.O) will take on market leaders such as Cisco outside China with a networking product line for large enterprises that will help it grow faster than the market in the rest of the world, a top executive said.

The network equipment maker -- a neck-and-neck rival with industry giant Cisco Systems Inc (CSCO.O) in China -- plans to use that success and expertise as platform to capture market share in other international markets.

China made up 57 percent of the revenue of 3Com, which has a partnership with Huawei Technologies Co Ltd [HWT.UL], in its latest reported quarter.

"Since we battled Cisco to a tie there, we believe we have a great opportunity to gain market share in a large market outside of China," said Ron Sege, president and chief operating officer, in an interview with Reuters.

"With that, we intend to go forward and compete against the industry leaders."

The company has decided to take its H3C brand -- which competes with Cisco in the Chinese enterprise networking market to global markets.

"The bottom line is we're going to continue to grow in China, but our goal is to grow at a faster pace in the rest of the world," Sege said. In China, Sege expects 3Com to grow with the Chinese economy -- in the mid single-digits.

3Com is trying to position itself as a second vendor, if not an alternative vendor. And it is making concerted push to win an increasing number of large contracts, Sege said.

The company has seen the fastest growth of its H3C product line so far in Europe. "We've been beta testing the H3C products most aggressively in Europe. And that's why we've had the most early wins there." 

It has bagged contracts with SNCF Group [SNCF.UL], France's state-owned railway, and French carmaker Peugeot (PEUP.PA), Sege said.

Other recent H3C customers include Massachusetts Institute of Technology and the Malaysian Administrative Modernisation and Management Planning Unit.

3com called these "marquee wins," typically multi-year, multi-million dollar deals.

CHANGE HAS COME... AGAIN

3Com sees an opportunity in the recession and its sales performance has been better than that of Cisco's, Sege said.

"The recession is global. The need to save money and not compromise on price performance and introduce a second supplier into the networking equation is really a global phenomenon." It is not the first time 3Com has made a strategic shift. After competing in the global large enterprise networking market

-- the one it is moving into now -- in the 90s, the company -- the one it is moving into now -- in the 90s, the company pulled out in 2000.

The company operates three brands: the 3Com brand targets small and medium-sized businesses, H3C the large enterprise and Tipping Point the high-end security market.

3Com shares have more than doubled in the last three months. They had hit $119.75 during the dot-com boom in 2000.