3Com Spins Out TippingPoint
This IPO does a few important things.
It reiterates to 3Com's Board and management team that they are not the Cisco killer; and that their brand is worn out. Over the past two years, 3Com didn't help TippingPoint one iota.
Focus is the name of the game right now. Focus on Switching. Focus on China. Focus, focus, focus. 3Com is one of the biggest of the seven dwarfs in switching, serving the small-medium enterprise market. 3Com brand is well known for NICs, which of course, are the PC equivalents of buggy whips. Without spending $$$ on a hot TV branding campaign or cable TV branding, 3Com will limp along. Hopefully now the management team has stopped their ridiculous expectations for North American sales. BTW, 3Com was not at Interop – a clear indicator that they'll wait for North American customers to come to the door the old fashioned way.
Edgar Masri is executing this plan to…
free up cash, focus the management team on switching and frees up TippingPoint to do what they need to do to fight the good fight. There was very little channel overlap between the 3Com proper and the TippingPoint security division channel. TippingPoint needed security-focused channels, which 3Com didn't have and really didn't care about having.
There was very little similarity in the sales approach. TippingPoint would most often implement a try'n'buy where the gear was left in the customer network and at the end of the try period would report all the nasty attacks that had been eliminated or observed. The customer was usually shocked and would insist on purchasing the product as is – 'no, no. Don't take it out.'
3Com didn't sell switches that way at all.
It seemed that the technologies didn't need to jive much either. The IPS product was so overwhelmingly strong in deep packet inspection that it was independent of switching fabric, and limiting its usefulness to only 3Com infrastructures and customers meant that it couldn't sustain future releases on such a small base. Besides, IPS is a large enterprise and EDU type product category. It's not well suited to the classic 3Com VoIP and small business customer.
Even the strength in VoIP security (TippingPoint Director, David Endler is chair of the VoIP Security Alliance ), didn't increase sales for 3Com or for TippingPoint in 3Com's VoIP customer base.
This was a deal that only looked good on paper in 2004, and Edgar finally realizes that the time to advance is now.
Does this mean 3Com will sell off the VoIP unit next?
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