3COM Study of Retail Networking Market Shows Large ATM Demand in 1997 and 1998; Growing Bandwidth Requirements Cited as Top Reason for Selecting ATM Technology.

SANTA CLARA, Calif.--(BUSINESS WIRE)--Jan. 8, 1997--The first comprehensive survey of networking technology in the retail industry shows demand for high-performance Asynchronous Transfer Mode (ATM) technology dramatically increasing over the next two years.

The survey, conducted for global data networking leader 3Com Corporation (NASDAQ:COMS), shows that although ATM has already been adopted by a handful of retailers demanding high-bandwidth requirements at their headquarters, 28 percent of respondents indicated they were likely to deploy ATM between 1997 and 1998.

Of those planning to adopt the new technology, 20 percent cited bandwidth requirements for their networks, while only four percent said that cost was an issue in selecting the next-generation network technology.

Atlanta-based Home Depot, the world's largest home improvement retailer, recently standardized its headquarters on ATM. "We carefully examined and compared all of the currently available networking technology," said Dave Ellis, director of information services for Home Depot.

"ATM was best suited to support our bandwidth-intensive internal communications applications as well as accommodate our future network requirements, including imaging and electronic retail applications." In some instances, large-format store retailers are beginning to deploy ATM as their in-store network backbone when integrating previously separate point of sale (POS) and in-store processor (ISP) based networks into a single cohesive architecture.

"Retailers are clearly driven by the need to support enterprise-wide client/server implementations and more graphics oriented content," said Jeff Siegel, 3Com's retail industry group manager. "In order to meet that performance demand, ATM is becoming the technology of choice for many retailers as a headquarters network backbone."

In the local area network, or LAN, the migration from Token Ring to the more cost effective Ethernet is particularly strong in in-store/point of sale networks. The migration from Ethernet to Fast Ethernet and ATM as headquarter campus backbones is being driven by enterprise client/server applications and by increasingly graphic oriented applications.

Of those respondents considering wide area network (WAN) technology, Frame Relay adoption is dominant during the first six months of 1997 for large-format store retailers while the less expensive ISDN is being considered primarily by small-format store retailers and as a backup to Frame Relay for larger format store operators.

Intranets Have a Solid Presence in Retail

Thirty-eight percent of surveyed retailers reported that they are currently using an Intranet, or private network, in their businesses.

"Intranets will undoubtedly be deployed by retailers at an increasingly rapid pace as supply chain management and customer service applications implemented as in-store kiosks, on-line electronic catalogs, and merchandise locator/special ordering systems become indispensable in the competitive retail industry," said Siegel.

"What's particularly interesting is the re-engineering of applications from conventional client/server and terminal/host to more network-centric browser/server architecture. This trend will accelerate as retailers seek to develop more flexible applications that can be instantly and frequently modified without incurring the costs associated with distributed applications."

Other Key Survey Findings

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-- Of the 100 retailers surveyed from the U.S. and Canada, 27 percent spent between 11-25 percent of their information technology (IT) budget on networking products in 1996. This category is expected to jump to 39 percent by 1998, while the 44 percent that spend less than 10 percent of their IT budget on networking products is expected to shrink to one-third.

-- The predicted increases in IT spending coincide with the timing of upcoming ATM, Fast Ethernet, Frame Relay, and ISDN waves.

-- In the WAN, 30 percent of firms plan to deploy Frame Relay technology between May 1997 and November 1998. Twenty-one percent cited cost as the main motivation for selecting the less expensive technology and 10 percent cited bandwidth concerns. Fifteen percent expect to deploy ISDN within the same time frame.

-- In the LAN, 16 percent foresee deploying Fast Ethernet as a headquarters campus backbone, while less than two percent plan to adopt FDDI technology at anytime within the next three years.

-- Twenty-six percent of respondents said they utilized an integrated voice and data network. Of those with separate networks, one-third said they planned to integrate communications within two years.

-- Eighty percent are currently not outsourcing their IT implementation programs, and virtually the same number stated they had no plans to do so in the future.

Survey Methodology

One hundred retailers from the U.S. and Canada, most of whom are among the top 300 largest retail companies, were surveyed by telephone. Collectively, the surveyed companies represent 10 lines of trade spanning a broad spectrum of retailing.

Where appropriate, responses were segmented and analyzed according to store format types in order to better understand which technologies and business drivers were most relevant to particular scenarios.

About 3Com

3Com Corporation has helped more than 45 million people gain access to critical information through high speed networks. Designed to serve large enterprises, small offices and homes, 3Com products provide a scaleable architecture to meet the immediate and long term connectivity needs of today's users.

3Com has helped most of the world's largest retailers to design and utilize networked solutions for competitive advantage. Retailers use 3Com systems for POS and in-store networks, enterprise/store connectivity and distribution networks as well as for their headquarters campus networks and retail calling centers.

With research and development on three continents, 3Com is one of the data networking industry's largest and fastest growing companies. The company's innovative marketing, sales and support simplify communication, optimize network reliability and protect customer investments. For further information, visit 3Com's World Wide Web site at http://www.3Com.com or call 1-800/Net-3Com.

To view the key findings of the report, visit 3Com's retail industry web site at http://www.3Com.com./nsc/industry/ritmenu.html .

This news release, other than the historical financial information, may consist of forward-looking statements that involve risks and uncertainties, including, but not limited to, quarterly fluctuations in results, the timely availability of new products, the impact of competitive products and pricing, and the other risks detailed from time to time in the company's SEC reports, including the report on Form 10-Q for the quarter ended August 31, 1996. Actual results may vary materially. -0-

Note to Editors: 3Com is a registered trademark of the 3Com Corporation. All other brands and names are the property of their respective owners.

CONTACT: 3Com Corporate Communications

Peter Ruzicka, 408/764-5853

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