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3Com and Trapeze: Engaged But Not Married

The latest example of this strategy involves a partnership announced
this week with Trapeze, which might be thought of as one of the "big 3"
wireless LAN switch startups (along with Airespace and Aruba). Although
details are a little sketchy at this point, the partnership extends well
beyond the type of OEM deals Airespace has forged with Alcatel, NEC and
Nortel. Yes, 3Com will be reselling a version of Trapeze's Mobility
Server and Trapeze access points. But the more strategic element of this
arrangement relates to future joint software development.

In the old days, 3Com probably would have acquired Trapeze. In today's
business environment, however, partnerships are perceived as not only
less financially risky but also potentially more productive. It has
never been easy for large corporations to absorb and assimilate
innovative startups, and there's no reason to believe this would have
been an easy marriage.

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A joint development relationship has the potential to yield greater
benefits than a straight OEM deal while being much less risky than an
acquisition. This partnership could pay off for both companies, but it
won't be easy. 3Com brags that it evaluated 32 wireless companies before
deciding on Trapeze. I'd love to see that list. The market reality is
that there were at most half-a-dozen companies that could have provided
3Com with both the technology and the credibility to make a run at the
enterprise WLAN market. It's no secret that 3Com was negotiating with
Airespace and Aruba. Neither company was interested in the kind of
partnership 3Com was after. The bottom line is that Trapeze was a better

3Com has achieved considerable success in the enterprise WLAN market,
growing its market for both WLAN NICs (27 percent market share,
according to an April study from Synergy Research) and smart access
points (at 16.5 percent, a distant second to Cisco's 46.5 percent).
Perhaps more significantly, 3Com has considerable mindshare. In a recent
reader survey conducted by Network Computing, 3Com was a solid
second-place to Cisco in reader perceptions of the company best able to
deliver enterprise-class WLAN solutions. Despite positive momentum,
however, 3Com recognized that it needed a more advanced enterprise WLAN
solution to compete.

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