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3Com's IA Decision: Audrey We Hardly Knew Ye

SANTA CLARA, CA—When 3Com Corp announced substantial third quarter losses last week the company also announced plans to drop two product lines: the Audrey Internet appliance and the Kerbango Internet radio. 3Com said it would suspend all marketing activity on both products on April 1, and would cease operations on them permanently on July 1.

Because Audrey and Kerbango were the only two products to emerge from 3Com's Internet appliance division, industry watchers are expecting the company to disband the entire division, which was created only last year. At press time, no one at 3Com would comment on this prediction, but 3Com spokesman Brian D. Johnson did confirm that the company will continue to make home-networking products.

In a phone interview, Johnson drew an analogy between 3Com's experience with the Audrey and the IA market and Apple Computer's experience with the ill-fated Newton and the hand-held market. "The Newton was ahead of its market," he said. "Today, there's simply no doubt in our mind that the hand-held computer category is a great category to be in. We believe in the potential of the IA category. The Audrey was a great product that was reviewed fabulously, and we have a lot of enthusiasm for it. But we have neither the time nor the financial resources to wait for that particular market to happen. It's important for 3Com to become profitable right now."

According to Brian O'Rourke, senior analyst at In-Stat, a unit of Cahners Business Information market research group, 3Com's action could have significant effects on the IA market.

"The Audrey was the most visible, well-known IA on the market," O'Rourke wrote in a recent In-Stat Information Alert. "3Com was seen as a leading proponent of the device segment, and one of the market leaders in this sector. When coupled with Netpliance's exit from the market in late 2000, it leaves Compaq as the only one of 2000's top three Internet terminal suppliers still in the market."

About the Author

John K. Waters is a freelance writer based in Silicon Valley. He can be reached at john@watersworks.com.

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