Reasons to buy ??
1) The upgrade cycle. The early word was that 3Com was going to offer fully-configured routers with one option (software). The initial price might be at par with Cisco (with no upgrades) but 40% below a fully configured Cisco router. It looked like a winning strategy to me (an IT consultant). Who wants to deal with a vendor for an upgrade? It has to be cheaper to manufacture a fully configured router. Just the savings from not having to have multiple testing routines, for multiple options, would seem to be a winner. Translating that savings, and lower labor costs, into a cheap router seemed logical to me.
2) Reliability. China is buying Japanese equipment seeking Japanese quality levels. The issue about the JV's quality is FUD (i.e., fear, uncertainty and doubt). Why skip on quality and pick-up the high cost of U.S. maintenance personnel? I expect the quality to be world-class. I also expect Cisco to keep 3Com out of the big IT shops by using FUD. That could last for up to two years but, eventually, CEO's will be talking to each other about how much they are saving by not buying Cisco. It will take time to establish a reliability profile but, when 3Com does, it will help get the big sales.
3) Engineers. There was lots of press years ago, when the Iron Curtain fell, that well-trained Russian scientists would flood the market. It never happened. It should have, but it did not happen. 3Com is going to use cheap, well educated Chinese engineers. That is a good move -- and not just from a cost standpoint. There are billions of Chinese. There has to be some outstanding people wanting to capitalize on their potential. Why not let there be a close relationship between the product engineers and its manufacturing? It makes all the sense in the world.
-- from motley fool's 3Com msg board (by dduct) |
