'The essence of our marketing strategy for the Asia-Pacific region-in one word-has been partnership' - Mathew Kapp,President, Asia-Pacific, 3Com

-Mathew Kapp, President, Asia-Pacific, 3Com.

In an industry where changing

jobs is more of a rule rather than an exception, Mathew Kapp, President, Asia-Pacific,

3Com, can be called an exception. But then, instead of job hopping, Kapp has been doing

country hopping, having traveled across the globe in his 10-year tenure with the company.

Prior to his present designation, Kapp has been 3Com's Regional MD for the UK, Russia,

Middle East and Africa. He was also MD of the company's Benelux operations. Currently,

Kapp is looking after the company's Asian business strategy and accelerating its focus

into the large enterprise, SME, carrier and consumer served market sectors. In an

exclusive interview to DATAQUEST, Kapp, who was recently in India, talks about various

issues relating to 3Com and the networking industry as a whole. Excerpts:

What are the trends in the

global IT market?



I think that there is a paradigm shift happening and the current information revolution is
definitely moving toward communication convergence. I think that the PC era is over. Of

course, not literally. PCs are going to be there, but as the mainframes do today. They

will continue to do the computing bit, but the traditional role of connectivity would be

taken over by a whole new form of appliance connection devices that have sprung up. These

devices are providing information access to people in a mobile fashion.






The other trend that is clearly visible is on the networking front. The network's core or
the intelligent network of the telcos is becoming more stupid, if I may say so. The core

is achieving high speed using technologies like wide division multiplexing with

terrestrial fiber optic. This is changing the high-speed switched ATM packet based and

IP-based networks. So what's happening is that the intelligence is moving out of the core

and heading toward the access point. This is putting the control of the networks into the

hands of the users. So even as the carriers are adding massive amounts of bandwidth to

their network, they seem to have lost control of it. Then the access too is becoming

faster and high speed with wireless and data being carried through fixed wire, DSL and the

cable network. This is creating high amount of competitive pressure for the carriers, as

the users are increasingly becoming more selective of the carrier service they want to

use. Globally, this is a very interesting development and it is evident from the price

wars, mergers and acquisitions in the carrier segment.

What are the focus areas for

3Com?



Our vision and core competency is in networking. We want to make networks or connection of
networks more ubiquitous. We want to take people from access to network, be it on a LAN or

a WAN. We extend our different solutions to the small and medium enterprises (SMEs) and

the large corporates to take them to the carriers smoothly. We have been very focused on

the ATM backbones for the LAN and the campus, for the Gigabit Ethernet and the remote

access. However, the one area where we are weak is the WAN segment where Cisco has a major

positioning in routers. Overall, 3Com looks at its business through four lenses. These

are: the carrier market and what all is happening in this market, the large enterprise and

where it is heading, the SME segment and how ecommerce and e-business are developing it.

Lastly, our focus is the consumer market and we are continuously evaluating the buying

habits of the consumers. We have around 7,000 developers for the Palm Pilot project with

over 1,000 applications.

What has been your marketing

strategy for the Asia-Pacific region?



The essence of our marketing strategy for the Asia-Pacific region, in one word, has been
partnership. We are partnering with the carriers to help them build the network

infrastructure and are helping them to bring applications suiting their customers. This is

important for the carriers and us as the business is going through a dramatic shift. As

the carriers are moving to provide higher bandwidth and their business moving to low

margin model, they are increasingly looking at new services on which they can build their

customer base. So we are partnering with these companies to help them capture fresh

markets with new applications like VoIP, fax over IP and wireless PDA. Similarly, in the

large enterprise segment, we are pursuing a deliberate approach to key large accounts

developing their campus and WAN with ATMs and gigabit ethernet. Our goal is to help these

companies move toward virtual private networks so that they can connect their remote

offices and employees.

Where does the channels fit into

your strategy?



Channels are very important for us as they serve our link with the SME and the consumer
market. We are partnering with the channels to develop a whole new range of services to

make the SME segment a high growth one. What happens in the SME segment is that the

customer, usually, does not have the necessary IT expertise and expects it from the

resellers. We help our channels, through the partner's program, to develop the necessary

skills and capabilities so that they can add value to their business. The other objective

of developing our channels is to ensure that we give the best support and services to all

our customers. An example to this commitment is the introduction of the Palm Pilot in

India. We have deferred the launch of the product till we put the best infrastructure in

place in the country.

What effect did the Asian crisis

have on 3Com?



Yes, the Asian crisis has had an impact on our business in the region. We did not grow as
fast as we used to, before. Nevertheless, we have stuck to the course and continued with

our investments in the region. We have invested heavily in setting up our support

infrastructure and manufacturing and are looking at other activities to improve our

infrastructure in the region. Of course, we had to be very selective with our investments

and opportunities. We have put in around $70 million for the manufacturing plant in the

region. Also, we have invested close to around $15 million in sales and support

infrastructure. We have built a technology support center in the Asia-Pacific region which

has incurred an infrastructural cost of around $15 million and we are in the process of

further upgrading this infrastructure. So it has been fairly heavy.

What is the nature of the

investments made in India?



This is what we have been trying to work over. Our investments will be toward three key
areas of activity in the country. We will be taking some key initiatives in terms of sales

and marketing. The other area would be toward developing the support capability for

products and services that we may want to support at 3Com, outside the Indian market and,

lastly, to look at the opportunities of investment in India in services and software

segment.



The investment plan for India is in process now. The first step has already been taken
with the announcement of our 100% subsidiary. We think that this will give us the

flexibility to quickly move the investment we choose to do along the line. It will also

help us to look at investments to develop our local business and provide opportunities

back into 3Com in terms of services and software development. So the plan is being

finalized and that is the key reason why I am in India.

Do you think that the networking

market in India is mature enough vis-a-vis the others in the Asia-Pacific region?



Definitely. I think that a major thing happening is developing the national network
infrastructure. This is being driven by deregulation and opening up of the market.

Moreover, it is going to serve India's goals toward building a $50-billion software

industry in the coming years. The reason is simple. As the communication infrastructure is

built, you are able to get very low-cost education and hence build a strong technical

resource base.






The other reason is that the country can have a cost-effective e-business transaction.
SMEs can quickly get into the worldwide market for business thereby developing the SMEs in

the region. The big thing I find about India is that the country is well placed to add

value and take away a major chunk of the global internet software market.

What is the marketing approach to

the Indian market?



Every market, particularly in the Asia-Pacific region, has unique characteristics. The
same holds true for India as well. Nevertheless, we feel that the importance of this

market is picking up. Our approach toward India is to ensure a situation where we can take

big local decisions quickly. However, we have to keep in mind the alignment to the global

strategic goals and carve out local strategy and tactics. So typically our goals are very

similar across the markets, though our strategies to execute may vary in each market.

Are you looking at any specific

segment in the market?



In India we are focusing on three key areas: carrier, enterprise and modem market. These
three are the hallmark of 3Com initiative in India. Though in the past we have not been

successful in the crowded modem market, this time around we have created a special

position for our product and the market acknowledges this. We feel that as the carrier

market opens up, it will create a huge business opportunity for 3Com. We are not focusing

on the consumer market, as we are apprehensive of the support infrastructure. Once that is

put in place, you can be sure of seeing some great action on that front too.