3Com has pulled out of the storage area networking (San) business, just days after announcing its latest commitment to the emerging sector.
At the beginning of the year, 3Com's chief executive Eric Benhamou said Sans would be one of the key growth drivers for the underperforming networking outfit.
But late Friday, the company confirmed that it had pulled out of the San business and would be refocusing its efforts on its most profitable lines of business.
Storage area networks 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."
"This decision enables 3Com to shift resources and talents into those areas expected to yield the greatest returns," added Clafin.
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 unfocussed.
"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 San Jose, California, based 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. The companies planned to combining 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 bares a similarity, nevertheless they have a different set of buyers looking for different criteria, that is too far away from 3Com's home ground," he said.
Analysts at IDC estimate that Sans will account for 37 per cent of all external storage spending by 2002, creating a San market of around $11 billion.
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