3Com’s Tidd on Audrey: “fundamentally made a mistake”

TORONTO – 3Com Canada Corp. president Nick Tidd took a frank attitude towards difficult market conditions in a conversation with CDN at Comdex Canada Thursday. The company cut 3,000 staff across its global offices on May 25 in an effort to return to profitability.

Tidd described 3Com as “cash rich” but the selling off of property, assets and ultimately people was viewed as a necessary evil when faced with the spectre of market slowdown. 3Com went through a particularly troubling period of its history recently with its Internet appliance Audrey and Internet radio product Kerbango, both of which have been discontinued. “If you ever want to study a catastrophe in business development, I’ll show you those two examples,” said Tidd.

3Com sunk US$180 million in development into the former and attempted to market the product with a US$799 sticker price. “We fundamentally made a mistake,” said Tidd. “The appliance market is there, (but) it’s not there for 3Com. We know (Audrey) was priced too high and there was nothing we could do about it.”

Tidd said after the expensive development and components the product contained, it was impossible to sell off inventory below cost. Speculators would be foolhardy to guess when we might return to the heady days of profligate IT spending and healthy margins, he said. “I don’t have a clue,” he said. “I’m running 3Com on a sales/revenue model. When the time comes we’ll look at reinvesting. I would challenge anyone who says they can predict the end of the downturn.”

The days of ‘if you built it, they will come’ are behind us, Tidd added. Companies spent millions in Y2K preparation, and now have large infrastructures and wide pipelines to show for it. The question remains, what to do with it now? Tidd said one possibility might be the growth opportunities in the wireless LAN market. Bluetooth, meanwhile, is in its “honeymoon period,” but to literally cut the cord comes with its own host of problems.

“Just think of the complications you have in standards,” said Tidd. “People, I think, don’t understand it.”

3Com has attempted to reach what Tidd referred to as the “first market” for wireless technology. In March, the company successfully installed a wireless LAN in the CancerCare Manitoba centre in Winnipeg, and Tidd identified health care and education as key markets for its wireless technology. There will be opportunities in other lucrative areas, he added, such as barcode reading in retail, collaborative computing in the workplace and sales forces looking to synch to applications in the field.

3Com is currently in trials with a Saskatchewan 260-roomTravel Lodge. Visitors with laptops can use a card to connect to the hotel’s network infrastructure, and the project could potentially expand to Travel Lodges across the country. For now, Tidd keeps his eyes glued to the bottom line. “Our IT dollars are going to be spent where we can get immediate ROI,” he said. “It’s a shareholder world now.”

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