IBM and 3Com partnership has deep roots

IBM and 3Com's recent agreement to share patents doesn't add up to a revolution in networking, but it will probably give each vendor a slight advantage in their respective markets, observers say.

This week, IBM and 3Com announced that they would cross-license patents, with the goal of speeding network and other gear to market. While the companies have been collaborating on specific projects for many years, the new deal is much broader and free-wheeling in scope.

Sources close to the deal say it represents about $US1.3 billion in trade between the companies. Because IBM has far more patents than 3Com -- some 9000 awarded in the past five years alone -- it stands to reason that IBM will reap the lion's share of that cash.

While neither company will identify exactly what patents are in play, the agreement covers switch, network interface card (NIC) and modem technologies. 3Com may want access to IBM's server access and load balancing, Web caching, network management and virtual private network technologies. For its part, 3Com has a variety of patents covering things such as NICs, handheld devices and LAN switching technologies.

It is likely that IBM will go after 3Com's Ethernet switching technology, while 3Com may get mainframe-level server access technology, says Cindy Borovick, a research manager with IDC market research firm. 3Com may also be interested in some IBM legacy technologies, such as Advanced Peer-to-Peer Networking.

Both companies have been taking a drubbing recently from aggressive competitors such as Cisco. Faced with dwindling market share in networking, IBM especially has been struggling to reinvent itself as an Ethernet and IP vendor. Access to 3Com's switching technology may give customers greater confidence in IBM's new Ethernet role, Borovick suggests.

Of the dozen or so partnerships IBM's Networking Hardware Division (NHD) has had in recent years, those with 3Com and Xylan have perhaps been the most profitable. The 3Com alliance has probably been the longest-lasting. The two companies have been partners, in effect, since the early 1990s when 3Com bought ChipCom, which was working with IBM to develop the 8260 hub. The relationship continued after 3Com stepped in.

Although IBM lately has been making much of its own network gear, it still uses 3Com to fill out its Ethernet LAN switch product line, reselling a 3Com device as its 8271 Ethernet switch. And while IBM makes it own Ethernet NICs, it freely provides 3Com NICs to customers who want them, says Jane Munn, an NHD executive.

"We've had a multifaceted relationship," Munn says.

Although 3Com is to some degree a competitor of IBM's, Munn says it is the "nature of the network business today" to partner with one's rivals.

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