EDS To Carry 3Com Telecom Equipment

EDS' telecom sales have grown substantially, a fact that necessitates its 3Com deal, says Joe Warnement, EDS' president of communications services.

"In the course of the most recent 12 months, we did $8.3 billion; that's a major sea shift [from $135 million only recently]. In that regard, the cross section of our clients' diversity, size and service offerings required us to start thinking about a more diverse portfolio of providers," Warnement told VARBusiness. "We're not talking about picking one vendor for each individual client, but multiple vendors for each client. We just thought EDS didn't have enough diversity in our capabilities. 3Com is aspiring to the top and Cisco to the low. I'm not sure dynamically where the two will meet, but both are looking to better fulfill their portfolios."

Warnement is referring to EDS' alliance with Cisco to sell and integrate similar equipment, an arrangement that gives Cisco "special treatment." So will the 3Com deal ruffle some feathers?

"I don't view it necessarily as a cannibalization of the Cisco account," he says. "In order for EDS to stay a leader in network integration, we have to keep diversifying our offerings to keep winning customers. If all we offered were Cisco solutions, we wouldn't be afforded the work, and in that case no one would get the biz. So although their market share within the account may go down, the absolute spend going to Cisco will increase absolutely. If our growth model levels off, then you'll see some noses out of joint."

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EDS believes it's making the right move.

"There is such a great need for a technology integrator to match feature sets with a cost structure, rather than force an over-rich feature set," Warnement says.

Obviously, 3Com is pleased as punch with the EMS decision.

"This is a proof point of our strategy in taking products to market [to appeal] to higher-end Fortune 500 customers," says Anik Bose, 3Com's vice president of corporate business development. "Our traditional channels have been the small and midsize business market."

Bose says the manufacturer already has products appropriate for the enterprise market. The trick, he says, was "figuring new pathways to the large enterprise market." While Bose declined to put a dollar figure on what the announcement means to 3Com in terms of increased revenue, he did allow that "the business plan is significant for both parties...Absolutely, it will help our top line."

Warnement was a bit more direct. His company's decision, he says, will provide "substantial impact to turn around and catalyze the growth of 3Com's top line. It will make a substantial impact to stabilize and impact 3Com."

How did the deal come to fruition? In fact, Warnement initiated the idea.

"I made a trip to see [3Com president and CEO] Bruce Claflin in the later part of 2002 to talk about the entire network," he recalls. "3Com was struggling with its corporate direction -- a carrier focused strategy vs. an enterprise focused strategy. Bruce made a major shift to focus on the enterprise market. We weighed in support of that."

A Cisco spokeswoman says the company does not comment on other's companies' business activities.