3Com's Joint Venture With Huawei Begins Operations

The two companies had been waiting for regulatory approval from the Chinese government to officially launch the venture, which will enable 3Com and its channel partners to sell networking gear such as LAN switches and routers sourced from Huawei.

"By leveraging the enormous capabilities of our new joint venture, 3Com intends to fundamentally change the playing field in the enterprise networking industry," said Bruce Claflin, 3Com president and CEO and chairman of the joint venture, dubbed Huawei-3Com, in a statement.

3Com announced the joint venture in March and has already begun shipping products sourced from its new partner, including the Switch 7700 Layer 3 core switch and the Router 3000 and Router 5000 router families.

With the new products, 3Com has re-entered the high-end networking space after a three-year absence.

Solution providers said they expect the new technology to help 3Com challenge market leader Cisco Systems with full-featured, lower-priced offerings that provide higher margins to partners.

3Com's departure from the enterprise market left a void in its product line that forced some partners to farm out business to solution providers working with competitors' products to deliver complete solutions.

"I sell Cisco products through someone else every day, [but] I will stop that immediately when we get the [3Com routers] in hand," said Michael LeBlanc, president of LeBlanc Communications, a 3Com partner in Trumbull, Conn., in a recent interview.

However, partners expect to face challenges selling 3Com's new products. 3Com's departure from the enterprise market soured customers that had invested in the technology, so it could be difficult to win back their trust, solution providers said.

In addition, Huawei's reputation in the United States has been tarnished by a patent infringement lawsuit, filed by Cisco earlier this year, that has yet to be settled.

Cisco and Huawei neared settlement in the suit last month when they announced a stay in litigation that will enable an independent expert to review voluntary changes made by Huawei to disputed source code and user manuals for some of its router and switch products. The successful completion of that review will lead to the end of the suit, the companies said.

Based in Hong Kong with principal operations in Hangzhou, China, the joint venture allows 3Com and its channel partners to sell Huawei products under the 3Com brand name worldwide except in China and Japan. In China and Japan, Huawei-3Com will sell products sourced internally as well as from 3Com.

The venture combines Huawei's enterprise networking business assets, including engineering, sales and marketing resources and personnel, with 3Com assets related to its operations in China and Japan. 3Com is also contributing $160 million in cash.

3Com has the right to acquire a majority ownership interest in Huawei-3Com in two years.

Huawei-3Com begins operations with approximately 1,500 employees.