3Com Cuts Global Channel Chief, Regionalizes Partner Program

This year is off to a rocky start for 3Com, the Marlborough, Mass.-based networking vendor looking to recapture some of the luster it held decades ago.

First, the vendor's deal to be acquired by Bain Capital Partners was terminated this week amid national and political security concerns based on its ties with Huawei Technologies, a Chinese networking company with purported ties to the communist government. Second, 3Com has dissolved its worldwide channel program, phasing out worldwide channel chief Nick Tidd and his team and opting for what the vendor calls a more "regional approach" to its channel operations.

Bob Dechant, 3Com's senior vice president of worldwide sales, said 3Com is trying rebuild and re-establish itself in the marketplace by placing more accountability into local and regional markets, as opposed to the worldwide stage. Under the new model, 3Com's regional sales teams will control the channel in their respective geographies.

The ultimate goal, Dechant said, is to get 3Com solutions into key verticals from the mid-sized enterprise on down, as opposed to targeting the large enterprise where Cisco Systems has a market stranglehold and leaves other vendors fighting to play second banana. Dechant said 3Com's target customer-base falls into that midmarket segment and regionalizing the channel brings more attention to them.

"The DNA of that customer is very much regional and local," he said. "It's the most effective use of our resources to put our investments on that level."

Part of the shift includes the recent appointment of John Bazzone to vice president of North American channel sales. Bazzone will take over the role of Tidd in the North American arena. Bazzone, who joined 3Com one quarter ago comes from the sales and marketing side of Wallingford, Conn.-based video streaming vendor VBrick. Before that, Bazzone held positions with Cisco.

"What we're trying to do is build deeper relationships with our key partners and build customer intimacy with our end customers," Dechant said. "We have to do both."

3Com's reorganization is similar to that of Cisco Systems' Linksys division, which last month undertook a similar shift in direction, eliminating its worldwide channel chief position and pushing channel responsibilities out to the heads of its geographic sales teams. Irvine, Calif.-based Linksys cut the role held by Nigel Williams, vice president of Linksys' worldwide channel organization, to give each regional team more control over the channel.

3Com's approach will take a similar track, but 3Com partners wonder where the new direction will lead them.

Frank Kobuszewski, vice president of the technology solutions group at Syracuse, N.Y.-based solution provider CXtec, said he had forged a strong partnership with Tidd and 3Com during Tidd's tenure as head of the channel. He said he's upset to see Tidd go, and also concerned with how his departure and 3Com's restructuring of the channel will affect his company.

"We're not regionalized, so I'm very interested to see what the plan is for the future," he said. "[Tidd] did a hell of a job putting together programs that were successful and changing the ones that weren't."

Kobuszewski said CXtec is a unique type of partner and 3Com under Tidd's leadership embraced the fact that it was different. He said Tidd and his team offered an unmatched level of support.

"We formed a really good partnership," he said. "It's certainly going to be interesting to see what happens next."

Later, Kobuszewski added that "since we're not a regional partner, this doesn't do us much good."

Sean Johnson, business development manager for Hayes Computer Systems, a Tallahassee, Fla.-based solution provider, said he too is taking a wait and see approach. Johnson said he's stood by 3Com through thick and thin and hopes the change will be for good.

"It's going to be a wait and see," Johnson said. "I think it may be good for 3Com to take a new direction. I look forward to seeing some positive changes."

Johnson said 3Com has historically had a channel program he would call solid and he's sticking with them to see if the changes can reinvigorate their position in the market.

"I want to see them make positive changes and remain stable," he said. "I like change. I usually embrace change. Change is good."

Next: 3Com Hopes To Hold No. 2 Spot

Glenn Conley, president and CEO of St. Louis-based solution provider Metropark Communications, said reorganization or not, he's looking to 3Com to provide good products, and solid marketing and strong leadership that can help him compete against other vendors.

"It's a bunch of words that sound good," he said of 3Com regionalizing its channel. "But I don't care what you call it. Call it regional. Call it global. Call it local. If firing everybody means they're going to give us more regional help, I don't see it yet."

Dechant is quick to note that the regional shift is not intended to bypass or decrease the importance of the channel. He said 3Com's bread and butter was not on a global level, anyway, so taking a regionalized stance may help resellers. He said it doesn't make sense for a company like 3Com to invest heavily on a worldwide scale and "peanut butter" investment across a broader geography.

3Com currently has between 200 and 300 significant North American partners at their bronze, silver and gold levels.

"This is a joint engagement approach," Dechant said. "We want to get strategic partners who want to get strategic customers."

While on the surface it may appear 3Com is struggling, Dechant said that isn't the case. He said 3Com has had five consecutive profitable quarters, helping it capture the coveted No. 2 spot in the switching market place, a space where Cisco holds the largest stake and leaves other vendors hoping for a single-digit percentage.

Dechant added that 3Com's introduction of the Open Services Network (OSN) architecture which runs on its Multi Services Routers (MSR) which adds in applications from various vendors based on modular solutions.

"That allows our channel partners to build the solution and become the integrator," he said.

Over the next two quarters, Dechant said, 3Com is going to focus strongly on capturing mindshare and getting its name back into the market. While competition is tough, Dechant said he's confident 3Com can forge on.

"Let's first acknowledge there are a lot of players that are vying to be the strong alternative; the strong No. 2 in this market," he said. "The uniqueness 3Com brings is a strong portfolio of channel partners. We are in a stronger position than anyone else fighting to be that strong and viable alternative."

3Com will introduce the OSN model to its switching platform later this year. The modular architecture already features security, voice, WAN optimization and video applications for the MSR.

"The channel is looking for choice," he said, adding that decentralizing its channel operations will help 3Com recognize that channel needs in North America are different than those in Europe, Latin America and Asia. He said recentralizing will help partners get more targeted attention and faster response.

As for the Bain deal fizzling out, Dechant said channel partners need not worry.

Last month, 3Com and Bain Capital Partners withdrew their joint filing to the Committee on Foreign Investment in the United States (CFIUS) concerning their proposed merger transaction, a deal that would've given Huawei Technologies a more than 16 percent stake in the networking vendor. 3Com's Board of Directors unanimously approved a definitive merger last September under which 3Com would be acquired by affiliates of Boston-based Bain, a private investment firm, for roughly $2.2 billion in cash, with minority ownership going to Huawei. The parties submitted the proposed transaction to CFIUS, which monitors and reviews international mergers and can block deals if it feels national security may be at risk.

CFIUS was to examine Huawei's part in the merger. Huawei is China's largest networking company and reportedly has links to the communist government. While the deal would give Huawei a small stake in 3Com, there were concerns that 3Com's business with the U.S. government as part of its TippingPoint network security arm, which sells into the U.S. Department of Defense, raised a potential red flag that could call into question national security. 3Com and Bain withdrew their filing with CFIUS, stalling the merger. On Thursday, Bain released a statement saying it was terminating the deal because it and 3Com could not reach an agreement that CFIUS would approve.

Dechant said regardless of the outcome of the Bain merger, channel operations won't change.

"That doesn't change whether we remain a private company or become a Bain company," he said.