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3Com Gets Help From EDS

The IT services firm will offer 3Com products to business clients, giving the maker of networking equipment a boost as it tries to re-enter the enterprise market.

3Com said Tuesday that EDS has agreed to offer 3Com products to its business clients, giving the computer networking-equipment maker a boost in its re-entry into the enterprise market.

The deal is 3Com's first with a top-tier consulting firm. EDS is the second largest IT services firm, behind IBM.

EDS will also offer products developed through a joint venture between 3Com and China's Huawei Technologies Co. The Huawei deal followed 3Com's decision to re-enter the business market, now dominated by Cisco Systems, 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, says Brian Riggs, an analyst at research firm Current Analysis.

"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 says.

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.

However, EDS also offers Cisco gear, and the 3Com deal will not change its relationship with Cisco, EDS officials say. "The 3Com relationship supports EDS' s strategy to leverage a portfolio of best-of-breed technologies for the unique needs of enterprise clients," Joe Warnement, EDS's president of communications services, said in a statement.

While 3Com wants to move quickly into the business 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 Joel Conover says. "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 says.

Huawei announced in March that it would sell 3Com's voice over IP phone equipment and broadband network gear in China. It sells the 3Com's Switch 7700, and its 3000 and 5000 line 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.

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