3Com: Battling the Behemoth

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The company beats its main foe (Cisco, of course) on price and attention to midsize companies, customers say.

Usually, 3Com ends up locking horns with just one massive moose of a competitor (hint: Its name begins with C and ends with O). When it wins the fight, 3Com has come out ahead on price and what customers say is more attention to midsize companies.

And 3Com recently beat Cisco to market with a next-generation wireless networking system, developed with startup Trapeze Networks and released last fall. For Michael Baker, director of information systems at Underwood-Memorial Hospital in Woodbury, N.J., the 3Com Wireless LAN Controller WX4400 system lets his three-person networking staff manage 37 access points from a single screen instead of having to monitor each one individually.

"I'm tickled to death with the quality of the gear and the service we get out of 3Com," Baker says. View the PDF -- Turn off pop-up blockers!

In addition, 3Com is less pricey than Cisco, customers say. Samir Desai, manager of information technology for Intertex Apparel Group, a clothing manufacturer in New York, says 3Com's wireless products, at about $400 per access point, cost 40% to 50% less than Cisco's. "To me," he adds, "3Com's technology is superior."

But 3Com is outhustled in the marketing department, Desai says: "The name 3Com is still not as popular as Cisco. Cisco is a trusted, reliable solution in many people's minds. 3Com needs to do a better job of making a name for itself."

Sometimes, 3Com is simply dwarfed by Cisco, a networking juggernaut with 38 times 3Com's revenue. Two years ago Worldspan, an Atlanta-based travel services firm, scrapped its 3Com wireless gear in favor of Cisco's. Why? "The 3Com kit was not as widely used in the data center," says chief technical officer David Lauderdale. "It's not a knock on 3Com. We were just trying to consolidate vendors, standardize skill sets, and there were more Cisco certified engineers than those certified on 3Com."

By the same token, some say that for midsize companies, 3Com is much easier to work with. "3Com uses us as a selling point—they see us as an important account," says Mark Berkheimer, manager of information technology at Harrisburg International Airport in central Pennsylvania. "For Cisco, we'd be just another regional customer. There wouldn't be the priority to baby-sit me." —TODD SPANGLER

Wireless Networks

350 Campus Drive
Marlborough, MA 01752
(508) 323-5000



Hilton Nicholson
Senior VP, Product Operations
Heads development, sales and marketing of all products and services. Previously was president of the ADC business unit that developed equipment for transmitting voice, video and data over cable networks.

Brent Nixon
Dir., Product Management, Wireless Systems
Manages wireless local area networking products. Prior to joining 3Com in 1999, he co-founded Maxis Research, an automotive industry market research firm.

The 7250 access points support the 802.11g standard and can provide access to up to 253 users; 8250 access points add the ability to upgrade to 802.11a. Wireless LAN Controller WX4400 supports up to 96 802.11g managed access points and provides planning, configuration, network-optimization and user security tools. Wireless LAN Switch WX1200 supports up to 12 managed access points.
Reference Checks

Pechanga Resort & Casino
Rod Luck
VP, I.T.
Project: Casino and hotel operator in Temecula, Calif., uses 16 8000-series 802.11b access points to give guests Internet access.
Ventura Unified School District

Ted Malos
Dir., Technology
Project: The 18,000-student district in Southern California deployed five Wireless LAN Controller WX4400 switches in its new administration building.

Intertex Apparel Group
Samir Desai
Mgr., I.T.
Project: Clothing maker uses three 8000-series access points in its Manhattan showroom to provide network and Internet access to employees and visiting buyers.

State of Delaware
Jamie Stant
Telecommunications Technologist
(302) 739-9655
Project: State operates about 120 8750 access points at its main campus and other agencies' facilities.

Underwood-Memorial Hospital
Michael Baker
Dir., IS
Project: New Jersey hospital deployed the Wireless LAN Controller WX4400 with 37 managed access points to allow physicians to access clinical applications.

Harrisburg International Airport
Mark Berkheimer
Mgr., I.T.
Project: Airport in Pennsylvania uses 30 7250 access points to provide travelers with free Internet access over 300,000 square feet in and around its terminal.

Executives listed here are all users of 3Com's products. Their willingness to talk has been confirmed by Baseline.

3Com operating results*

2005FYTD 2004FY 2003FY
Revenue $474.60M $698.88M $932.87M
Gross margin 36.3% 34.8% 45.2%
Operating loss -$141.14M -$337.83M -$224.64M
Net loss -$137.36M -$349.26M -$283.75M
Net margin -28.9% -50.0% -30.4%
Earnings per share -$0.36 -$0.92 -$0.79
R&D expenditure $67.37M $95.20M $113.06M

*Fiscal year ends in late May or early June; FYTD reflects first nine months

Source: Company Reports


Total assets - $1.65B

Stockholders' equity - $1.33B

Cash and equivalents - $226.98M

Short-term investments - $655.80M

Long-term debt - None

Shares outstanding - 379.95M

Market value, 5/27 - $1.42B

**As of Feb. 25, 2005, except as noted

This article was originally published on 2005-06-10
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