3Com Not Affiliated with U.S. Ethernet Innovations

(The post below, written on October 16, 2009, has been superseded by a subsequent post that more accurately reflects the existing relationship between 3Com and U.S. Ethernet Innovations — Editor.)

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For the record, following up on previous posts, 3Com is not affiliated with U.S. Ethernet Innovations.

In email correspondence, Gene Skayne, a vice president of finance at 3Com, wrote the following:

US Ethernet is not affiliated with 3Com. We sold them some patents earlier this year.

From the ambiguous statements U.S. Ethernet Innovations has made on its website and in its press releases, one could be forgiven for thinking that the two companies are affiliated.

In a recent Network World news item regarding patent litigation filed against several computer vendors, U.S. Ethernet Innovations is said to own “the patents spun off from 3Com for the sole purpose of launching these sorts of lawsuits. ”

In its press release announcing the lawsuits, U.S. Ethernet Innovations provides the following boilerplate text:

U.S. Ethernet Innovations was formed to continue 3Com Corporation’s successful licensing program on behalf of its portfolio of foundational patents in Ethernet technology.

David A. Kennedy, CEO of U.S. Ethernet Innovations, said:

“We strongly believe that 3Com’s Ethernet technologies are being regularly infringed by foreign and some US companies. We believe that the continued aggressive enforcement of the fundamental ethernet technologies developed by 3Com against the waves of cheap, knock-off, foreign manufactured equipment is a necessary step in protecting the competitiveness of this American technology and American companies in general.”

This flag-waving, ostensibly patriotic approach to patent enforcement and litigation seemed at odds with the constitution and orientation of the 3Com we see today, which is why I am pleased to learn that the enterprise-networking company has nothing to do with U.S. Ethernet Innovations.

3Com, after all, has proudly assumed the mantle of a global company.

According to a feature article published this week on the Forbes website, Robert Mao, 3Com’s CEO, is said to live and work in Beijing. The article also discloses that 52 percent of 3Com’s revenue is derived from sales in China. Further, we learn that nearly all of 3Com’s research and development staff are based in China. With just a 3-percent share of the worldwide enterprise-networking market, 3Com has about a third of the Chinese market, putting it just behind Cisco Systems in that part of the world.

Says 3Com CEO Mao:

“Are we Chinese? Are we American? No. We’re a global company. Ideas, know-how, value can flow every which way.”

Titled “Cisco’s Threat From China,” the Forbes article explains that 3Com is pursuing a “China Out” strategy, using its base in China to expand its sales channels and product portfolio to target markets in the West.

As explained in previous posts I made in this forum, 3Com’s former joint venture with Huawei has been dissolved, and channel revenue in China attributable to Huawei is diminishing rapidly. To make up for lost Huawei business in China, 3Com must grow revenues in North America, Europe, and in developing markets outside China.

The China Out strategy was born of necessity, but that doesn’t make it any less logical. 3Com needs to expand into markets outside China. It must reassert a meaningful market presence in the U.S. and Europe.

Given that many of 3Com’s innovations and technologies today come from its employees in China, I was incredulous at the vague intimations of U.S. Ethernet Innovations regarding a residual relationship between the companies.

In my view, U.S. Ethernet Innovations is suggesting an affiliation with 3Com that does exist. Accordingly, 3Com should insist that U.S. Ethernet Innovations, on its website and in future interactions with trade press and business media, make explicit that it is not, in any way, connected to 3Com.