3Com Gets Help With The Enterprise From EDS

3Com Corp. on Tuesday said tech-consulting firm Electronic Data Systems Corp. has agreed to offer 3Com products to corporate clients, giving the computer-networking-equipment maker a boost in its re-entry into the enterprise market.

The deal announced Tuesday is 3Com's first with a top-tier consulting company. Plano, Texas-based, EDS is the second largest tech-services firm behind IBM.

EDS will also offer products developed through a joint venture between Marlborough, Mass.-based, 3Com and China's Huawei Technologies Co. The Huawei deal followed 3Com's decision to re-enter the enterprise market, dominated by Cisco Systems Inc, after largely withdrawing from it in 2000 to pursue small and midsize businesses.

Having Huawei as a partner is the reason companies like EDS are taking 3Com seriously, Brian Riggs, analyst for research firm Current Analysis, said.

"With Huawei products in their portfolio, 3Com stands a better chance of competing head-to-head with Cisco, and to be taken more seriously by top-tier system integrators and consulting companies that in the past wouldn't have given them the time of day," Riggs said.Part of 3Com's strategy in competing against Cisco is leveraging Huawei's cheaper Chinese labor to offer products at lower prices than the market leader.

EDS, however, also offers Cisco gear, and the 3Com deal will not change its relationship with Cisco, EDS officials said.

"The 3Com relationship supports EDS' strategy to leverage a portfolio of best-of-breed technologies for the unique needs of enterprise clients," Joe Warnement, president of communications services for EDS, said in a statement.

While 3Com wants to move quickly into the enterprise market, its progress is more likely to be measured in years, rather than months, analysts say.

"3Com is moving slowly up the ladder from the small business market to the large enterprise," Current Analysis analyst Joel Conover said. "Its products to date are still targeted at the small to medium-sized business market."Through the Huawei deal, 3Com is expected to move faster in selling to China's growing number of private businesses, while corporate sales in North America and Europe are expected to be much slower, Conover said.

Huawei announced in March that it would sell 3Com's voice over Internet Protocol (VoIP) phone equipment and broadband network gear in China. Huawei sells the 3Com's Switch 7700, and its 3000 and 5000 family of routers.

In October, Huawei and Cisco agreed to stay litigation in which Cisco accused the Chinese company of violating several of its patents for switches and routers. Huawei agreed to make changes, but the terms of the agreement were not disclosed. The lifting of the lawsuit has also been a boost to 3Com's efforts with Huawei.