3Com has pulled out of the storage area networking (SAN) business,ntrate on profitable lines just days after announcing its latest commitment to the emerging sector.
At the beginning of the year, 3Com's CEO Eric Benhamou said SANs would be one of the key growth drivers for the underperforming networking outfit.
But last week the company confirmed that it had pulled out of the SAN business and would be refocussing its efforts on its most profitable lines of business.
The surprise move follows a fall in 3Com's profits (see PC Week, 30 March).
SANs enable data storage, sharing and movement on multiple storage hosts using a centralised storage management system.
"3Com is making a difficult but good business decision," said 3Com's president Bruce Clafin. "And now is the right time to take these actions, before more money is invested and before product reaches our customers." Clafin added: "This decision enables 3Com to shift resources and talents into those areas expected to yield the greatest returns."
Home networking, IP telephony and Palm Pilot handheld computers are among 3Com's most promising business units.
Analysts said 3Com's decision to exit the SAN market would help it focus on other areas, but this move alone is insufficient and the company remains too unfocused.
"We don't believe 3Com can survive long-term based on status quo," said Neil Rickard, networking research director at the Gartner Group. "It needs to change."
The networking market is being driven by companies like Nortel and Cisco that offer end-to-end products, said Rickard. Through its relationship with Siemens, 3Com has all the required pieces, but the relationship is fragile and needs strengthening, he said.
3Com first entered the SAN market last November with an equity investment in Gadzoox Networks - widely credited as the inventor of the phrase storage area networks.
Just two weeks ago 3Com announced a partnership with network storage company Storagetek (see PC Week, 23 March). The companies planned to combine their SAN software, hardware and professional services.
While SANs and LANs use similar technology, they are very different lines of business for vendors, Rickard said.
"Even if the technology bears a similarity, nevertheless they have a different set of buyers looking for different criteria, which are too far away from 3Com's home ground," he said.
Analysts at IDC estimates that SANs will account for 37% of all external storage spending by 2002, creating a SAN market of around $11 billion (#7 billion).
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