3Com's eastern venture may slip in legal mess

John G. Spooner CNET News.com

Published: 21 Mar 2003 14:36 GMT

3Com has formed a joint venture with Huawei to deliver new networking products to businesses.

The 3Com-Huawei undertaking, based in Hong Kong and Hangzhou, China, is intended to bolster 3Com's product line by giving the company access to several new LAN switches and routers, devices that direct data on computer networks, the companies said in a statement.

3Com will be able to sell the joint venture products under its own brand throughout the world, except in China and Japan.

But 3Com, which has been battling slower sales, also stands to gain better access to markets in those two countries, where the joint venture will market 3Com products as well as former Huawei products under the 3Com-Huawei brand.

Huawei, meanwhile, expects to gain access to a number of new markets outside Asia.

For Santa Clara, California-based 3Com, the potential for market gain has to be measured against the possibility that the company is stepping into what could be a legal mess.

The joint venture announcement comes as Cisco, the dominant player in the networking market, has begun legal action against Huawei for patent infringement, claiming the company copied its software.

Huawei has denied the allegations, according to reports.

To form 3Com-Huawei, the Chinese company transferred its business networking products -- which include layer 2 and layer 3 switches as well as enterprise-class routers, and about 1,000 employees -- to the joint venture.

3Com contributed about 50 employees and $160m (£102m) in cash, and it will also use its relationships with resellers to market the joint venture products.

The venture's products will "neatly complement 3Com's existing portfolio," Bruce Claflin, 3Com's chief executive, said in a statement. "3Com-Huawei delivers a high-end extension to our existing products, allowing us to offer complete solutions to our customers."

Huawei will continue to offer carrier-grade networking equipment, the companies said in a statement.

Networks and networking products have seen huge innovation and growth in the last few years. High bandwidth LANs and Storage Area Networks are now in common use. ZDNet UK's Networking Central keeps you up to date with the latest news and views.

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