3Com Strategizes With Partners to Beat Competition

VARBusiness

Beginning on Wednesday, about 150 gold and silver partners for 3Com will gather in Las Vegas for a three-day partner conference. 3Com officials say this conference--a new event scheduled in addition to the company's annual partner conference--is to show partners 3Com products can sell and beat out the competition, even in a slow economy.

Like most networking companies, 3Com has been hit hard by declining sales of late. The company has responded to the tough times by significantly cutting staff and withdrawing from unprofitable product lines. Headcount is down from about 12,000 to 5,900. Just last week, a round of layoffs affecting 500 workers was announced,

Despite the turmoil, the company is making resources available to help the channel focus on selling its NBX communications system and others, according to Smith. The company wants to train more data VARs in voice solutions, and it has been helping its channel partners beat out bids from competitors, especially Cisco Systems.

VB: What is the purpose of this conference?

Smith: There are several things we want to accomplish. Probably the key one is that we want the channel partners to continue to understand they can still make great margin dollars when they sell 3Com. We will have a lot of presentations focusing on ROI, specifically selling 3Com products vs. our competitors. We have some nice ROI models built around the LAN switch side. When you sell 3Com, you make more money than the competition.

VB: What makes you say that?

Smith: They can make more money selling 3Com products because it's frankly less competitive than if they were to compete against 20 different Cisco resellers and the price keeps getting skinnier and skinnier. Say with a LAN switching product, there may be five Cisco dealers [for one bid, but someone with 3Com may come in a little bit less expensive but then there are not as many resellers competing for the same deal. With 3Com, the competition is less intense and there are not as many resellers competing against each other.

VB: What 3Com products present the greatest opportunity for 3Com channel partners?

Smith: We will be highlighting our IP telephony products. We've done very well with that and market share data shows that in the case of 500 users and down, 3Com is the dominant player. We'll continue to highlight that market. There are a lot of data resellers that may not have sold voice telephony. So while they're here [at the conference, they will have the opportunity to understand that this wave of IP telephony is coming and if you are a data reseller, you should consider getting on this bandwagon. You need to be in position. We will have classes scheduled where the VARS can get certified for free to sell the telephony product.

VB: Every major vendor is coming out with IP telephony products. They are starting to upgrade new versions of hardware and software. How can 3Com continue to be a strong player in this market?

Smith: We've proven we can compete against Cisco every time we go up against them. It's a very simple choice: we are easier to set up and implement and configure. Cisco is concentrating on the 2,000 and above user, but if someone has 5 or 600 employees, we seldom lose. Cisco is in the market and driving it and shaping it, and Avaya and some other larger players are there now, too. It helps verify this market is alive and is going to happen. We welcome them and want the competition. IP telephony is basically telephones that have been networked and who knows networking in a small to medium enterprise better than 3Com?

VB: What about the recent round of layoffs? Will they affect the sales and marketing staff working with the channel?

Smith: The channel will not notice any difference whatsoever. They will not notice any difference from a field perspective either.

VB: CEO Bruce Claflin said that 3Com will add some product specialists to help channel members sell IP telephony. How will that work?

Smith: We have people out on the streets that are helping the channel close and drive business. We've found the value of those people to be quite high, so we are making an investment in those field people. From time to time, channel partners need some help in differentiating [the product in a competitive battle. They will not be competing with the channel. They will help the channel win business and it's another resource for the channel.

VB: 3Com has been running a rebate program that rewards partners for choosing to sell 3Com LAN switching solutions instead of those from competitors such as Cisco and Enterasys. How is that going?

Smith: It's been fabulous. One hundred sixty nine proposals have come to the desk and out of that we've won 39 of the bids; 73 others are in the pipeline. The channel calls us and we take the bid and we see if we can do better. We reconfigure it with 3Com product instead of Cisco and we swap out everything. We turn around a competitive bid with graphics and get it back to the end user. There's no question about it, it takes business away from some of our competitors at the last minute.