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3Com forms new business unit, lays off 150
By Elinor Mills
InfoWorld Electric
Posted at 9:43 AM PT, Apr 16, 1999
3Com on Thursday announced that it is combining three business units to create a new Personal Connectivity Business Unit and laying off 150 marketing and engineering workers.
3Com is combining its former client access, new business initiatives, and home networking divisions into the new Personal Connectivity unit to eliminate redundancies in marketing and development, reduce expenses, and better focus on high-growth areas such as broadband, home networking, and wireless products, said Jeff Graham, senior vice president and general manager of the new division.
The new Personal Connectivity unit will have three new subdivisions: a business connectivity group targeted at corporations, telecommunications companies, and cable companies; a residential connectivity group targeted at home consumers; and an OEM group serving PC manufacturers.
The analog modem area had the greatest redundancies, so about 150 employees in that product group are being reassigned to other technologies, including the wireless area, and about 150 more will be laid off within two weeks, according to Graham.
"Residential connectivity, home connectivity, is by far the highest growth, although it's coming from a smaller base than the business market," Graham said in a telephone interview. "What's happening there largely is you're going from single Internet access with analog modems to shared access with broadband."
With shared access, home networks need gateways, devices that allow multiple users to connect to the Internet, Graham said.
3Com, like other networking vendors, has been throwing consumers technology without providing them an integrated product, according to Graham.
"Now we're pulling the technologies together into a single box for a simpler, integrated solution for consumers," Graham said. "The residential gateway, where we're pulling broadband and home networking [technology] together, is a breakthrough."
In addition to reducing expenses by reorganizing, the company also expects the realignment to improve its public image.
"Today, 3Com is seen as a modem and [network interface card] vendor," Graham said. "We are moving forward to being a connectivity vendor in the future."
Software development focus in the business connectivity group, meanwhile, will include work on virtual private network clients, mobile configuration manager software, and desktop management, according to Graham.
Another focus is wireless connectivity, marked by development of wireless high-speed LANs and cordless connectivity that replaces infrared with radio frequency technology, Graham said.
3Com's structural evolution has included a reorganization in March that combined its enterprise and carrier systems business units into a Network Systems Business Unit. With Thursday's announcement, the company has three main divisions: Palm Computing, Network Systems, and the new Personal Connectivity.
Slower than expected corporate sales and declining prices hurt 3Com's third fiscal quarter earnings, which were $89.6 million, or 24 cents per share, excluding one-time charges and credits, and $89.7 million including charges and credits, the company reported last month.
3Com Corp., in Santa Clara, Calif., is at www.3com.com.
Elinor Mills is an editor at large for the IDG News Service, an InfoWorld affiliate.
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