3Com is rumoured to be launching a spin-off company in a bid to compete with Intel in the low-end switching market.
The proposed company, to be named Impacct, will build chips for Ethernet hardware beginning in 1999, according to an internal document leaked to SmartReseller magazine.
Asian networking company Accton Technologies will invest $1 million (#0.61 million) in the new company, on top of 3Com's $7.1 million (#4.4 million).
Accton manufactures PC networking cards, adaptors and other low-end networking kit and has a strong relationship with 3Com already. 3Com has badged some of Accton's products including the TP8 eight-port hub.
Steve Pearce, manager of network reseller Span, said: "The fight is on at the low end; it's a commoditised market now. 3Com needs to differentiate the dual-speed hub it sells to the corporate market from the dual-speed hub that goes to the SME market. Setting up a separate product line with Impacct would do this."
Pearce pointed out that Bay also manufacturers its low-end Net Gear range in Taiwan. "It means keeping the costs down," he said. "This is a standards-based industry and there are very few components outside of packaging to differentiate one product from another."
Setting up its own silicon company would enable 3Com to compete more aggressively with Intel, which has sidled up closely to the desktop networking market with cut-price NICs and other devices. Neil Rickard, research director at Gartner Group, said: "It would be a good idea for 3Com to look at gaining direct access to silicon and get control of the technology."
3Com would neither confirm nor deny that the formation of a company such as Impacct was on the cards.
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