Taking yet another stab at the high-end enterprise networking market, 3Com is today launching its H3C Technologies brand of equipment globally, along with an invitation-only channel that will take aim directly at Cisco.
3Com -- once considered an Ethernet pioneer and Cisco's fiercest competitor in the '90s -- will have a difficult time convincing North American channel partners and high-end customers to invest in its enterprise equipment. The company dumped its high-end corporate networking portfolio in 2000, leaving many channel partners with a gaping hole at the top of their line. Then in 2003, 3Com made another attempt at entering the enterprise market with equipment it had developed with Chinese company Huawei. That equipment -- branded H3C -- was successful in China, but not in North America.
"3Com bailed on the channel, or checked out on them for a while," said Janet Waxman, IDC vice president of infrastructure channels and alliances.
What's more, while 3Com has maintained a networking portfolio and channel focused on the small and medium-sized business (SMB) space, the company is returning to a much more challenging enterprise market than it left behind. This year, Brocade has taken its newly acquired Foundry equipment and launched an end-to-end storage, data center and core portfolio that will be sold through tens of thousands of IBM partners, as well as a fledgling Brocade channel. In addition, Hewlett-Packard beefed up its HP ProCurve line to serve the high-end data center, and with the acquisition of EDS, HP has a worldwide army on the streets angling for Cisco's business.
3Com is hoping its H3C line will take North America by storm, as it did China. 3Com and Huawei developed H3C enterprise equipment over the last five years. In 2008, 3Com bought out Huawei, and the line has now captured the largest enterprise accounts in China, growing to $609 million in revenue in the five years since launch.
3Com is using the recession as its marketing angle to conquer the North American enterprise market. Saar Gillai, 3Com senior vice president of worldwide products and solutions, likened H3C to Toyota, which disrupted the automobile market during a recession with innovative technology and lower prices. 3Com is promising that its H3C technology can outpace Cisco at prices that are 20% lower.
"This is the perfect storm -- a combination of a downturn when people are asked to do more with less," Gillai said. "Because of the downturn, people are considering other vendors. Networking is not that complicated, so why do I have to be locked in?"
Virtualization-ready H3C switches and management platform target Cisco
3Com's H3C has a technology story worth telling. The North American portfolio will include a new high-end data center switch -- the S12500 -- that will rival the Cisco Nexus 7000. The S12500 offers 6.6 terabits of throughput and scales to either 864 gigabit ports or 512 10 gigabit ports. Like the Nexus 7000, the S12500 also enables a unified fabric of converged Fibre Channel and Ethernet. H3C also promises that the switch will use 50% less power than the Nexus 7000.
Then there is the new H3C S5800G/XG Flex-Chassis, a modular switch that can work in the core or the access layer of a medium-sized enterprise network or can sit at the top of rack in the data center. The switch can support up to 24 ports of 10 gigabits per unit or up to 80 ports of 1 gigabit per unit, supporting Power over Ethernet (PoE) for energy efficiency. What's more, the S5800 offers a virtual fabric so that switches deployed throughout a network can be managed as one.
"You can deploy the 10 gigabit version in three different buildings and manage it as a single switch," said Dominic Wilde, 3Com senior director of global product line management.
The switches come with the H3C Intelligent Management Center (IMC), a virtualization optimized platform that manages the entire enterprise network in a multi-vendor environment. The H3C management platform is specifically designed to manage virtual platforms as quickly as they are created and dismantled.
"Cisco's Achilles' heel is their management story," Wilde said. "They have 76 different products that manage different products [in the network]."
H3C rounds out what will be a triumvirate of 3Com brands, including the self-named SMB focused networking equipment and the TippingPoint line of security products. All in all, the H3C North American channel will also be able to sell a full set of IP telephony communications and video surveillance equipment, as well as the company's security suite, including unified threat management and VPN firewall.
3Com partners need not apply?
For a company in the process of building a new channel, 3Com is releasing very few hardcore details about the partner program. Like the Brocade channel, H3C is promising that it won't over-saturate the market with partners, as its competitors do. That said, the company won't say exactly how many partners will be enlisted this year.
3Com did say that many of the existing Focus Partner Program partners won't necessarily be asked to join the H3C channel unless they fully qualify. The new H3C Enterprise Partner authorization process ensures that new partners have expertise in selling and supporting enterprise networking solutions from the network edge to the data center. The first companies to become H3C Enterprise Partners are BT France, Datcom and Lefatshe in EMEA and Corporacion Font, HPCG and THEOS in Latin America. Additional authorized partners will be added worldwide in the coming weeks.
"The kinds of sales that are involved for the large enterprise are unique to a different type of channel partner," said Alex Dobson, vice president and general manager for North America. "This is really a more sophisticated type of partner that can be involved in complex data networking requirements. We're looking to nurture [new partners] in addition to the partners that already fit. 3Com has an existing base of channel partners that are in the hundreds, and we will continue to work with them."
Neil Medwed, president of Richardson, Texas-based Preferred Technology Solutions, is one of the 3Com partners who have been asked to join the H3C channel. From Medwed's perspective, "the fruits of the partnership with 3Com are finally becoming ripe."
Yet 3Com partner PM Systems Inc. hadn't even heard of the H3C North American release when contacted late last week.
"We don't really care about high enterprises," said William "Beau" Sanders, president and CEO of S.C.-based PM Systems. "We've been going mostly with Cisco lately anyway because that's where the demand has been."
Analysts agree that it's smart for 3Com to start with a smaller, extremely qualified channel for H3C.
"Cisco doesn't open up all of its products to everyone that wants to sell them. You've got to meet some criteria," Waxman said. "This is really high-end networking."
A smaller channel must also be more tightly managed and appropriately executed to attack specific regions, according to Forrester analyst Chris Silva. Also, H3C can be more experimental with pricing when working with a smaller group of partners.
"Starting with a small focus that ultimately broadens is a better idea," Silva said, adding that it's hard to "stop a snowball once it's rolling."
New VARs for H3C won't be recruited in the usual way. Many of the new data center-focused partners will come through customers that H3C is already talking to, Dobson said. He added that H3C has been pitching equipment directly in the U.S. for nine months.
"We want to approach this in an organic way, first earning our stripes again with high-end customers," Dobson said. "When we get into the end user, there may be a vendor in that account, and they haven't thought of 3Com in the way that we can present ourselves today."
Once new VARs are signed on, Dobson said, the company will work more intensely to provide them with end-user contacts instead of "relying on them completely to do all of the selling." But he also promises a deal registration program that will protect these VARs from losing deals to rival VARs or direct sales. The program will also reward partners for integration and ongoing services.
3Com H3C to play the price card against Cisco
3Com has long sold itself as the cheaper alternative to Cisco, and the company has not been able to maintain a huge market share even in the midmarket. That said, Cisco has worked hard to capture the Chinese market and has largely lost out to H3C in the past five years.
"I think they have good timing here," Silva said. "What they're going to try to be is a cost leader … they're appealing to budget sensitivities. Right now, 38% of companies are still investing in the network."
From a channel perspective, the recession is giving enterprise IT employees a little more leeway in terms of what they are allowed to buy.
"It's not just Cisco that has good products anymore," Medwed said. "Extreme has good products; Juniper has good products."
"Switching is not rocket science," he said. "If you go for the 3Com solution, you're going to achieve the same end results. Because of the economy, if you're going to spend $2 million on Cisco gear, and a comparable 3com solution may be $1.4 million, that $600,000 is key."
Silva warned that 3Com might want to reconsider focusing so hard on Cisco when HP -- which has been known as the cheaper alternative to Cisco -- poses such a competitive threat. On the other hand, he said, HP's recent headway in the enterprise market is ultimately a good sign for 3Com.
"More exposure for HP ProCurve is good for anybody in the market," Silva said, "because it sends the message: 'We can do what Cisco does at a lower cost.'"
The IMC management platform will be available in June, and the S12500 and S5800 will be available in July.