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3Com - a company built on ether

Master of technologies that vanished

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The focus now was on the bits that make networks work - bridges, routers switches, and hubs. The company also went on an acquisition spree, buying up various companies involved in the manufacture of network components.

That spree culminated in the purchase of US Robotics, maker of the much-beloved Sportster and Courier modems. By this time 3Com was really in the business of selling low-end networking kit to end-customers and companies wanting to connect networks together, and US Robotic's strategy of providing cheap deals to ISPs to promote adoption of its proprietary standards worked well - in 1998 the company was bringing in $5.42bn, though in the same year it spent most of the profit on $253.7m of acquisitions and integrations.

The company also suffered, somewhat unfairly, as everyone assumed the day of the modem was pretty much dead with everyone moving to ADSL and cable modems within a few months. In reality, that shift took years - in places it's still happening, leaving US Robotics still selling dial-up modems to this day.

With US Robotics came Palm, but while it was fun to own the leading PDA manufacturer it was hardly core to 3Com's business. Despite making a little foray into consumer-connected devices in the form of the Audrey, the company decided to get out while the going was good and spun Palm off in 2000.

Boarding a slow boat to China

3Com had done many things, but most of its income was still coming from Ethernet cards - most of them admittedly embedded in motherboards, but still generating revenue. But into the 21st century even those started to disappear, the capability being built into system chips. The company cut back its workforce, which had risen to 13,000 in 2000, to about 2,000 staff and relocated to Massachusetts.

In 2003, 3Com did a deal with Huawei to get into the Chinese market, setting up a joint venture based in Hong Kong. That project proved so successful that last year the partners bid against each other for complete ownership. 3Com won the auction and took control in November last year. But the venture also allowed both Huawei and Bain Capital to get a good look at 3Com from the inside, and demonstrated how attractive the company could be.

The fact that 3Com has been bought comes as no great surprise: Nortel was in the frame for a while, though some predicted a further carve-up between established players. The deal will probably still have to be agreed by the US government, who might not want the Chinese learning how to make cheap Ethernet cards or network switches.

Huawei has been trying to raise its profile in the west for some time, as most tech journalists will testify, but purchasing 3Com is rather more dramatic than throwing alcohol at a few hacks as they've tried in the past. It gets a lot more press, too.

3Com started as that rarest of breeds: a successful pioneer, reflecting the brilliance of its founders but also a fair bit of luck in hitting the right product at the right time. Cautious in business, but willing to jump headlong into new technologies with little regard for their eventual success, 3Com made many mistakes but got lucky more often than chance would seem to allow.

We need a 3Com, willing to take risks and make mistakes, as if no-one takes the chances then nothing develops. Hopefully the new owners will maintain something of that pioneer spirit, they can certainly afford to.®

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