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Technology Stocks : 3Com Corporation (COMS)

COMS 0.00130

-18.8%

Nov 7 11:47 AM EST

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To: Elroy who wrote (11064)	12/2/1997 12:50:00 PM
From: craig crawford	Read Replies (2) of 45548

<< When Intel lowered NIC prices early this year and 3Com matched the cuts, 3Com gained market share on Intel. >> While the most recent numbers showed COMS shipped 2.14 million external NIC's to INTC's 1.34 million, the latest Dell'Oro (3Q) numbers showed INTC overtook COMS in the embedded NIC market. INTC's shipments grew 60% over the previous quarter. How exactly is that a rejection of INTC's strategy? << You be the judge. If Intel doesn't cut prices, there is no other competitor large enough to affect the market. >> Tell that to CPQ who just formed an alliance with INTC encompassing many technologies but most specifically NIC's. Alan Lutz (head of Communications Products Group at Compaq): VB:Why commit to one vendor [Intel]? Why didn't you leave your NIC options open? Lutz: Well, we had two choices, Intel or 3Com, and the process of formulating a strategy was heavily centered on market research. I've had several outside firms assisting us with the research during the course of this year. Customers don't believe that the NIC is a sophisticated edge device as 3Com does. They believe that something that cost $50 should be inserted in the machine when built; it should work when turned on and never fail. Their belief is that it can't be that complicated if it costs only $50. 3Com talks about it as being the edge of the network. They talk about applications requesting the edge of the network and RMON being done from the edge of the network. The customers that we researched, and we did research a lot of them, say, "All we want this to be is an interface to the network. Don't try to make our lives complicated with the sale of an edge device." They see that strategy as tying them to that vendor.

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