Senior Vice President of Marketing, 3Com
It was the shot heard round the networking world: The
announcement that Santa Clara, CA-based 3Com and
Skokie, IL-based U.S. Robotics intended to join forces
reverberated not only throughout the switching/routing
and remote access markets, but through the business
and financial media, as well.
One of the biggest high-tech mergers on the books, the
$7.3 billion deal represents 3Com's next step in its
quest to provide customers with end-to-end
connectivity.
Many pundits proclaimed the arrangement with U.S.
Robotics promising. The lack of overlap between the
two companies' offerings would avoid both troublesome
duplication of products and services and the
unpleasantness of substantial layoffs. And the creation
of a stronger competitor in this market segment
introduces some intriguing possibilities.
But the deal also raises several unknowns (see "3Com
Takes Stock," page 38). What's 3Com's strategy for
melding the two companies into one very large
organization? How will the new firm strike the crucial
balance between agility and stability? What impact will
the deal have on 3Com's upcoming product offerings
and marketing strategies?
Janice Roberts, 3Com's senior vice president of
marketing, provides a look over the horizon and into the
future of a revised networking landscape.
Network Magazine: What were the primary motivations
for 3Com's acquisition of U.S. Robotics?
Janice Roberts: 3Com has been a leader in local area
networking and has participated in the wide area, but it hasn't
been particularly strong-either in the wide area marketplace or
in some key channels that pertain to that marketplace.
The primary motivation was for 3Com to have a strong
presence in network access and in remote access, at the
enterprise level and with the carrier and the service provider. It
was important to extend our networking products through other
channels, such as retail, where U.S. Robotics has already
established itself. It's a little-known fact that U.S. Robotics'
business in remote access is as big as Ascend Communications'
business.
The wide area space-in particular, remote access-is the fastest
growing. Our strength has traditionally been in the enterprise,
but enterprise customers are looking to link more and more
users to the enterprise through remote access technologies.
Also, we saw that enterprise customers were moving to
high-density platforms, and they're deciding more often to
outsource remote access. Customers are also looking for
end-to-end connectivity solutions.
Network: What's your fundamental strategy for
implementing the merger?
Roberts: This is a big merger, and big mergers in the past have
been difficult to pull off.
We have structured the deal so that we will have clear
leadership. When the merger is final, the new company will be
3Com. Also, the plan is that Eric Benhamou will continue to run
the company. Both 3Com and U.S. Robotics have what we call
pluralistic companies. We have multiple divisions in the United
States, Europe, and Israel. We're used to working with
different parts of our business in different places.
We've also been using our technology to build a system that
works. U.S. Robotics has done the same thing. By continuing
on this path, we can make this merger work.
There are some key elements that we can make work very
quickly. This acquisition is not about taking all the different parts
and putting them into one big chassis. We will be selling each
others' products through our respective channels. We'll be
selling both companies' sets of products in a much stronger way
to service providers, and we'll be leveraging our international
infrastructure.
Network: How do you think the merger will affect your
position relative to competitors such as Cisco Systems
and Bay Networks?
Roberts: We compete with them in a different space. With
respect to Bay, we'll continue to develop our presence in the
enterprise space. We'll continue to introduce products through
a broad range of channels, and to position ourselves well
against Bay.
We compete very heavily with Cisco in some areas, but our
product range doesn't exactly overlap, and we have a different
approach to the marketplace. Our strength starts at the edge, or
the boundary, of the network. We'll continue to improve that
position with the U.S. Robotics merger. This is where we will
have a clear advantage over Cisco.
Also, because of the product set we have and our core
competencies in ASICs and manufacturing and distribution, we
will be stronger in market segments such as the small office, the
enterprise extension business, the small business, and in taking
networks to the home and to the consumer. We're in a stronger
position when you consider where networks are going as
opposed to where networks have come from.
Network: Where will the merger place 3Com in relation
to remote access vendors such as Ascend and Shiva?
Roberts: Shiva has focused on low- to mid-range products for
the enterprise, and that company hasn't been able to capitalize
on the high-density platform for either enterprises or service
providers, hence its relationship with Northern Telecom. We
have the higher-access platform in a much broader set of
products.
Ascend continues to do well in the smaller service provider
marketplace. U.S. Robotics' focus has been on the higher end
of service providers, and, therefore, it will capture a larger
percentage of subscribers.
Also, the fact that we have an enterprise position is very
important for U.S. Robotics-the combined company will be
able to provide the network access solution either directly to
the enterprise or through the service provider or carrier,
whereas Ascend has basically no enterprise position. Together,
3Com and U.S. Robotics will have a stronger infrastructure to
win business overseas in emerging markets such as Asia and
Europe.
Network: Will 3Com's shift further into the small to
medium-sized Small Office/Home Office markets reduce
direct competition with Cisco?
Roberts: We have recently introduced platforms such as
OfficeConnect, which focuses on the small office. We also
announced major programs dedicated to the small business,
and we have a dedicated unit within 3Com that focuses on
marketing products to the small business.
Small businesses tend to buy through VARs. 3Com has a
broad distribution channel of VARs, and we're developing
specific programs for the VAR to sell to the small business.
With U.S. Robotics, we'll have a much stronger presence in the
retail channel, which is where small businesses buy today.
Network: Will 3Com reduce its emphasis on software, or
are developments such as TranscendWare management
software a sign that you'll be further cultivating offerings
in this category?
Roberts: Probably over 80 percent of 3Com engineers are
software engineers. U.S. Robotics philosophy has been about
providing software-upgradable, software-based modem
functionality. Many of U.S. Robotics' products can be
upgraded or changed using the Web.
Announcements such as TranscendWare software, Fast IP,
DynamicAccess, and U.S. Robotics' x2 technology, which is
downloadable from the Internet, will strengthen our position in
software. We'll also continue to put more intelligence into the
client access products. You'll see more in terms of added
features such as security and network management.
Network: One major opportunity inherent in the
acquisition is increased access to the large ISP market
through U.S. Robotics' existing inroads. How will 3Com's
strategy change to pursue this market more
aggressively?
Roberts: At 3Com we have a dedicated sales force for service
providers, and U.S. Robotics has one as well. We will combine
those sales forces so that we will have more coverage of the
service provider marketplace in the United States and overseas.
The biggest opportunity is to continue to build our presence in
the United States not just with access products, but with other
products that help service providers and carriers provide more
comprehensive managed data solutions to enterprise customers
and to small businesses.
Also, because we'll have a stronger infrastructure, we'll be
looking to penetrate the service provider and the carrier market
strongly in Europe and in Asia, and we'll have a strong focus on
emerging markets such as China.
Network: With the expanded retail distribution you
expect to achieve through U.S. Robotics, what existing
products could be winding up on retailers' shelves, and
what types of products might 3Com develop specifically
for this market?
Roberts: U.S. Robotics sells a ton of its products through retail.
Essentially, the whole range of modem products and the Palm
Pilot handheld device are sold in the retail environment.
At 3Com we're already selling our products-adapter cards,
hubs, and the OfficeConnect network kit-through retail, but not
in such a strong way as U.S. Robotics. We will be selling more
products through the retail and distribution channels. We will
continue to develop a range of handheld devices such as the
Palm Pilot from U.S. Robotics.
You can also expect us to sell networking products for the
home. We'll extend our range of ISDN products and access
products to the retail channel. As carriers and service providers
deploy cable-to-cable and ADSL [Asymmetric Digital
Subscriber Line] technology, we'll be selling ADSL modems
and cable modems.
Network: In walking the tightrope between U.S. Robotics'
x2 and Rockwell's K56flex competing 56Kbit/sec modem
technologies, can you satisfy existing customers with
3Com systems based on K56flex without losing
momentum for x2?
Roberts: 3Com is supporting K56flex technology. Since we've
entered this acquisition with U.S. Robotics, we'll continue to
support both technologies. These technologies will converge
upon a standard, and we will support that standard. We believe
x2 technology is very close to what the final standard will be.
Network: Could you explain the strategy for your new
high-speed products, including Gigabit Ethernet, and
Token Ring over ATM offerings such as NICs, the
Cellplex ATM switch, and the SuperStack II Token Ring
switch?
Roberts: At 3Com we're not religious about any one particular
technology. It's our belief that networks will tend to be built
going forward as they are today, with a combination of
high-speed technologies.
We'll continue to support Fast Ethernet, Gigabit Ethernet, and
ATM. We'll continue to see a broad uptake in Fast Ethernet,
and we've recently announced price changes in our Fast
Ethernet systems on the hub and switch side. This will better
enable customers to accelerate the move to Fast Ethernet.
Network: There's some debate as to whether a
substantial number of users need Gigabit Ethernet at this
point. Will pursuing this market have an adverse effect
on sales of your existing Fast Ethernet and ATM
products?
Roberts: I don't think there's any danger of that. We've spent a
lot of time talking to customers about applications. Last week
we were at an offsite with a number of key customers, and they
were talking about getting more bandwidth in the network.
They're talking about applications such as video conferencing,
voice over the LAN, and more applications where higher
performance is needed. Our customers are looking at deploying
switched networks, and moving to higher-speed technologies.
Network: Do you think that some organizations that are
candidates for higher-speed technologies will leapfrog
over Gigabit Ethernet and jump straight to ATM?
Roberts: No, I think they use the products in different parts of
the network, and it depends on the structure of the network.
Some might use Gigabit Ethernet, but because ATM is here and
it's a standard, people are going to continue to deploy
ATM-and to deploy ATM at the core of the network. I don't
think people are going to take ATM to the desktop. People are
looking to take Fast Ethernet to the desktop, and that will
continue. People will move to Gigabit Ethernet when it's here.
A lot of people are looking at integrating voice and video and
data over networks. ATM will be a key technology for that.
Network: What was the major objective of consolidating
your Oncore, Cellplex, and LANplex products under the
CoreBuilder banner?
Roberts: Basically, each product has a role within the network,
but we [found] that because we were calling them different
names, customers were confused and doubted whether we
would continue with one platform over another. We decided to
make it simple for customers by talking about all these products
under one name: the CoreBuilder brand.
Network: What's the next move for 3Com's Fast IP
switching technology?
Roberts: Fast IP is a technology that enables high-performance
networks and focuses on the local area. What we're looking to
do with Fast IP is to provide the speed of switching with the
control of routing. Its software is embedded in all of our
products, from the NIC card right through the range of
switching products.
Fast IP also enables 3Com to interface to wide area products
such as the Cascade IP Navigator WAN switching solution.
Fast IP interfaces with IP Navigator, which we do using the
IFMP [Ipsilon Flow Management Protocol]. Our next move is
to start delivering products, and we'll be doing that this summer.
We will also continue to develop more industry partners.
Fast IP is based on industry standards and will extend across all
products. To make Fast IP a standard and make it ubiquitous,
we'll put it in our adapters, and we will be able to enable other
vendors' products with Fast IP as well. In our original
announcement on Fast IP, we were supported by other
partners, such as IBM and Novell.
Network:Is 3Com planning any other mergers or
acquisitions?
Roberts: We'll continue to look at acquisitions and mergers as
a way of building our portfolio of products and technologies.
We will be involved in activities such as high-speed networks
and network management.
Network: What will the switch/router and remote access
markets look like in five years?
Roberts: You're likely continue to see people moving to
switched networks. Enterprise customers and carriers and
service providers will move to switched networks for the
performance and simplicity.
The remote access market will continue to grow at a rapid rate
as we extend network access to everyone-to employees, to
travelers, and to people at home. More and more people will
be looking to connect to online services and to the Internet.
Network: Where will 3Com fit into these market
segments?
Roberts: When the merger with U.S. Robotics is finalized, we
believe we'll be the leading network access company, and we'll
continue to extend that lead, providing remote access solutions
to the enterprise for the service provider and for the home user.
In five years you'll see a broad-based consumer market as well.
3Com will continue to have a leadership position in workgroup
switching, but we will also extend our position in core switching
and participate in the higher-end WAN switch market. |
