3Com's Focus Now on Smaller Businesses

HONG KONG (05/05/2000) - With plans to restructure 3Com Corp. unveiled in March, executives have assured channel partners that the company is focused on providing products that meet the needs of small and medium-sized businesses.

"The real growth opportunity is in the small and medium-sized commercial customer site," said Edgar Masri, 3Com's senior vice president of business development, to the assembly of more than 100 distributors, resellers and systems integrators attending the company's annual partner conference in Penang, Malaysia.

"Two or three years ago, these customers may only have had a few computers.

Things have changed now -- these small companies can now compete with the largest out there and build as effective a brand through the Web."

Masri estimated that while the market for large enterprises is enjoying single-digit annual growth, opportunities in the small and medium-sized business market, including firms with 1,000 or fewer users, is growing fast.

"This is a US$16 billion business and is growing at high speed," he said.

"We're completing the transformation of 3Com by focusing our resources on our core networking business. We are pulling out from areas that represent a drain on resources," said 3Com CEO Eric Benhamou.

At least one reseller attending the Penang conference said 3Com's strategy makes good sense.

"I think what 3Com is trying to do is wise. This is the right thing to do, judging from the market environment," said Singapore-based Sng Eng Sim, senior manager of ECS Computers Asia.

On the other hand, Sng said that he and a number of his customers were upset with 3Com, not just because the company plans to discontinue some products, but also because they had to hear about the restructuring from the news media rather than directly from 3Com officials.

3Com officials, however, defended their efforts to disseminate news of the restructuring and said they had no alternative.

For a public listed company, this is the only choice for announcing important news like this, said Matthew Kapp, president of 3Com Asia-Pacific.

Kapp said that restrictions put in place by U.S. Securities and Exchange Commission allowed only a core group of company executives to be involved in managing the announcement of the restructuring process.

3Com has moved rapidly in communicating with its sales channels and customers about the restructuring, said Kapp.

"Eric [Benhamou] has been on the road covering 3,000 people so far. I've been on the road for the last three weeks and will be so for the next three weeks, visiting customers, making sure that all issues are being addressed," said Kapp. "(The process) is painful, I understand. But I think we've maximized our ability to actually go and do the right thing here," he said.

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