Networking, not computing, is the current hotbed of technological innovation, according to 3Com president and chief executive Bruce Claflin.
He explained that technologies such as wireless networking, voice and data convergence, Gigabit Ethernet to the desktop and 10Gbps in the backbone and to the server have made networks more important to business operations than ever.
"Innovation is very much more alive in networking than in computing," said Claflin in an exclusive interview with vnunet.com.
"Sun chief executive Scott McNealy was right when he said that the network is the computer. Computers are the nodes on a network and networks are core to business needs."
He added that networks have become fundamental to the development and delivery of new applications.
Networking applications, such as Voice over IP, have become more important to the enterprise and to 3Com.
The main focus of its strategy in the past 18 months has been to win back the enterprise market.
3Com ditched a number of product lines, and sold off businesses that were not generating enough revenue, as it moved to Ethernet only technology.
But, in the process, many customers that had built networks around 3Com equipment were left fuming.
Claflin defended the decisions, maintaining that they had proved to be correct. At the time the company was haemorrhaging money. Cash reserves are now strong and cash flow has been positive for three quarters.
"We've done with the survive phase, and we are moving onto the thrive stage," said Claflin, who believes that the economy will begin to improve next year and admitted that he longs to see a return to normal market conditions.
But he wants a return not to the heady days of the dotcom boom but to the early 1990s, where growth rates were a more sustainable 12 per cent a year.
In March 2000, when it dropped many of its top-end products, 3Com went Ethernet only.
But Claflin admitted that, were he to make that decision again, he would not only give customers more notice and time to move to Ethernet but ensure that a more complete range of Ethernet products was available.
"We believed that the world was moving to Ethernet," he explained. "We got out of other technologies a bit too quickly, but we had to do it."
That move has brought in fresh competitors. As well as competing with traditional rivals such as Cisco, Nortel and Extreme Networks at the top end of the market, 3Com is now battling Dell's layer-2 switches at the lower end.
While Claflin respects the networking newcomer, he warned that it will not be easy for Dell to make inroads into a heavily commoditised lower end of the market.
At the high-end, Claflin admitted that 3Com's decision to drop its very top-end enterprise switches had left it with a gap.
This weakness has since been addressed by its new Expandable Resilient Networking core local area network switches, he said, which allow corporates to build network capacity when required.
These switches have helped 3Com become the second largest enterprise network vendor in the US, behind Cisco, according to research by IT consulting firm AMI-Partners.
Christian Dunster, senior analyst at AMI-Partners, pointed out that 3Com's real strength is in the small business market where it ranked number one in terms of brand awareness.
In this sector, Claflin indicated that service and support is the key. "To be a tier-one supplier you must excel in quality, service and support," he said. "To not do that will kill you in the long term."
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