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Strategic Partners or Merger on the Horizon?

Written By: G. Duhaime
Published On: May 8 2000

Strategic Partners or Merger on the Horizon?
G. Duhaime -May 8, 2000

Event Summary

In March 3Com Corporation and Extreme Networks announced they would be entering into a strategic alliance for all existing 3Com customers to migrate away from the now debunked CoreBuilder 9000 to the more robust BlackDiamond 6800. For existing 3Com customers, this migration path will not only allow them to obtain up to a 70 percent discount on a new BlackDiamond chassis, but also to enhance their current core network.

Along with the migration path that is being offered to existing 3Com customers, Extreme is bringing on board more than 200 sales, engineering, and marketing personnel from 3Com. In many cases, this will mean that existing 3Com customers will actually see no change in their existing account team. The only major change will be that they will now be selling an enhanced Enterprise switching product.

Market Impact

The exit of 3Com from the Enterprise marketplace will create a void in the Tier 1 vendor market that no vendor can currently fill. In essence, the enterprise market is narrowing from three vendors to two - Cisco and Nortel.

Even though Extreme offers a full range of Layer 3 switching devices, it has no WAN routing products, and is not ready to step into the void created by 3Com. However, we still expect Extreme to increase their market share in the switching space. With the migration plan Extreme has outlined for existing 3Com customers, we believe Extreme is well positioned to become the number one vendor in Layer 3 ports shipped in 2000.

We feel that the combination of Extreme's migration plan with the addition of 200 qualified sales, engineering, and marketing personnel from 3Com should allow it to retain a minimum of 60% of 3Com's customer base. This will more than likely be a rapid growth spurt, as Extreme's discount program has an end date of September 2000, but one that we believe has staying power.

Another benefit that users should factor into their decision is the interoperability testing that the two companies have performed to ensure all existing features function properly on both platforms. This will cut down on the learning curve for Network Engineers on the new platform.

User Recommendations

If you are a network manager faced with telling your boss that your network backbone is obsolete and no longer supported, but the core can be replaced with something that's 60% faster for less than $30,000.00 USD, most CIO's will jump right on board. This will be just one of the enhancements that can be leveraged compared to the existing CoreBuilder.

The migration plan that Extreme Networking is offering is 70% off list price for a BlackDiamond 6800 that is comparably sized to your existing CoreBuilder 9000. While all of the vendors in this space are offering similar plans, none can match this offer. With the combination of Extreme's technology enhancements and migration plan, all of the other vendors fall short.

The only remaining question we at TechnologyEvaluation.com have is: Is this a strategic partnership or the beginnings of a merger between the two companies?

 
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