Microsoft, 3Com To Co-Develop Networking Products

Microsoft and 3Com Corp. say they intend to cooperate in developing products that can be used to build "converged" networks for transporting data, voice, and video.

3Com, which already makes some networking products that run on Microsoft Windows servers, plans to expand that support, the two vendors say. 3Com will open a development center near Microsoft's Redmond, Wash., campus where this equipment will be built and tested.

The companies will cooperate in all of the customer segments in networking: products for carriers, large enterprises, and consumers. For example, in the carrier space, 3Com will migrate its Total Control remote-access systems to the forthcoming Microsoft Windows NT Embedded Operating System. For enterprise customers, 3Com will embed Windows NT Server in its high-end LAN switch, Corebuilder 9000. This switch is used by companies and large organizations to aggregate smaller, slower connections to workgroups.

Analysts say the alliance is an attempt by 3Com to cover its bases at a time when prices for LAN equipment--a major chunk of the vendor's business--are sliding. "LAN products are under tremendous price pressure," says Tom Nolle, president of Cimi Corp., a network consulting firm. "3Com has to do everything they can to sustain the margins on their products, particularly high-end products. The integration of Microsoft products such as Active Directory is crucial in the maintenance of margins."

Active Directory is a network directory Microsoft is currently developing and intends to release as part of Windows 2000 Server when that product becomes available. Microsoft is working with 3Com competitor Cisco Systems on extending Active Directory and on developing a version that will run on Unix servers rather than NT.

Mark Lee, product manager at Microsoft for Windows NT Communications, says the relationship with Cisco will continue, unaffected by the 3Com deal. "Neither alliance lessens what we are doing with the other," he says.

For Microsoft, the alliance represents an opportunity to expand the Windows market, Nolle says. And, given the antitrust investigation of Microsoft, he adds, a deal with a major network vendor such as 3Com is probably likely to attract less scrutiny than one with a computer vendor.