A small war declared: 3Com New Fire Chip Takes Aim at Cisco
Systems: Bloomberg Forum
Atlanta, Oct. 9 (Bloomberg) -- 3Com Corp. Chairman Eric
Benhamou said its new Fire chip will help boost its share of the
market for building computer networks at large companies at the
expense of rival Cisco Systems Inc.
3Com's new line of Corebuilder switches based on its Fire
chip will move large amounts of information through networks for
a fraction of the cost of a traditional Cisco router, he said.
''This is a platform that will cause a lot of trouble for
Cisco,'' Benhamou told the Bloomberg Forum at the Networld &
Interop trade show in Atlanta.
Other versions of Corebuilder switches using the Fire chip
will appear next year, some of them featuring Gigabit Ethernet, a
new high-speed technology for moving data, he said. Cisco has
said it won't introduce Gigabit Ethernet until sometime next
year, without being more specific.
''We believe we have a time-to-market advantage over
Cisco,'' Benhamou said.
In the market for consumer modems, Benhamou said 3Com is
continuing to gain market share as the transition to 56 kilobit-
per-second modems continues.
Total modem sales have been held back by the existence of
two competing standards for 56K technology. While Benhamou hopes
a universal standard will be agreed early next year, 3Com as the
market leader is winning more customers, particularly among
Internet service providers, or ISPs, for its X2 version of the
56K technology.
''We have just signed up our 1,000th ISP. Time is on our
side,'' Benhamou said.
3Com is also one of the largest makers of remote-access
concentrators, used chiefly by ISPs to connect hundreds of
telephone callers to the Internet. That market will see an
acceleration of price declines, Benhamou said.
Cutting costs, though, will increase 3Com's profit margins,
putting the squeeze on smaller competitors that can't match
3Com's efficiencies at large-scale production, Benhamou said.
''We are very comfortable with a scenario of price erosion
and margin expansion,'' he said.
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