Siemens is poised to grab a chunk of 3Com's networking equipment business, according to reports, a move analysts say would help put both companies' houses in order.
3Com is seen to be floundering at the moment as it wrestles between its interests in the consumer and business markets. Meanwhile, Siemens' data networking plans are in their infancy and its profile outside Europe is low.
Next week the picture could become clearer. Siemens is reportedly considering buying 3Com's carrier equipment business - for an estimated $1.2 billion and buying a further two US based networking companies.
The problem according to analysts is that 3Com's focus is just too widely spread. 3Com has split its marketing activity between modems and network interface cards for consumers, switches, hubs and routers for SMEs and large enterprises and carrier class equipment.
The company also has its Palm Computing division that sells Palmpilot handheld computers to consumers and enterprises.
Consumer products are believed to account for around half of 3Com's business, even though it considers itself a rival to enterprise and carrier equipment leaders like Nortel, Cisco and Lucent.
3Com's carrier and service provider business - built largely on products inherited from the acquisition of US Robotics - is not working out and may even be hindering the company's progress, according to analysts.
"The acquisition was disappointing in terms of its ability to improve its position as a service provider supplier," said Jim Slaby, senior analyst at Giga Information in Boston. "It cost them a lot in terms of market momentum and Ascend and Cisco shot right past them."
"The good news is that [selling the carrier equipment business] makes them easier to acquire by someone else," said Slaby. "There's a lot of people who'd like to get their hands on the non Palm business."
Ericsson and Nokia are both companies who would benefit from getting their hands on 3Com's large enterprise and SME businesses, according to Slaby. "There's a lot of potential suitors who'd love to combat people like Nortel and Cisco," he said.
IDC analyst Katy Hartley said 3Com appears to have lost focus recently. "If they sell off the business unit that sells networking equipment to telephone companies - it might help them regain focus, and concentrate on their strengths - selling to small businesses and enterprises," she said.
Selling off the unit would also send out a clear message about their future strategy direction, she said, away from service providers, towards enterprise.
For Siemens, data networking acquisitions are vital, according to IDC's Hartley. "Siemens needs to be recognized as a credible data networking vendor in its own right. Siemens needs to quickly expand their portfolio of data networking products, through development or acquisition," she said.
"An acquisition of 3Com - even partial would immediately lessen their dependence on Newbridge products, and leave them less exposed," she said.
Siemens is expected to announce the acquisition on Monday of Castle Networks, a vendor of voice and data boxes for emerging carriers, and Argon Networks, a carrier class multi-service platform vendor.
Siemens is expected to pool its latest acquisitions in a separate US subsidiary, lead by former IBM executive Martin Clague. This is vital for the German company to make its name as well known in the US as Lucent or Cisco.
"If Siemens purchases any part of 3Com it will probably raise their corporate awareness in the US and make them less Euro centric - something that Siemens needs to tackle in the coming months," said Hartley.
In December, 3Com and Siemens announced a joint venture to develop a range of Lan telephony and multimedia products for enterprise customers. The announcement followed two years of cooperation, which analysts say is a good sign that the relationship is stable.
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