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3COM/SIEMENS TO DEVELOP LAN TELEPHONY AND MULTIMEDIA PRODUCTS.

3Com Corporation (Nasdaq:COMS) and Siemens AG have plans to form a joint venture to develop a rich set of LAN telephony and multimedia products that will change the way businesses build and operate their data and voice communications networks. Through the new joint venture, the two companies expect to deliver products in 1999 that will enable businesses to run voice, video and data calls over their local area networks (LANs) -- lowering their overall telecommunications costs and paving the way for new converged multimedia business applications. The companies are already working on joint development projects and intend to commence operation of the joint venture upon completion of definitive agreements early this year.

The joint venture, a significant step forward in the companies' 18-month strategic alliance, will accelerate and deepen their joint product development, broadening the range of solutions and markets they will address. To fund the joint venture, the two companies expect to share an equal initial investment valued at more than $100 million. This will enable both companies to establish themselves as early leaders in the emerging market for LAN telephony and related gateway products, which, according to analyst group Killen & Associates, will increase to over $4.1 billion by year 2002.

The joint venture will leverage the parent companies' data networking and telephony market strength and expertise required for success in this emerging market:

-- Siemens - a leader in the worldwide telecommunications market;

-- 3Com - the leader in the worldwide Ethernet data networking market;

-- Siemens' call processing for telecommunications functionality and interworking software for compatibility with enterprises' existing telecommunications environments;

-- 3Com's technology in fully-switched, end-to-end data networking solutions, enterprise high availability networking solutions, and comprehensive support of industry standards for class of service (CoS), quality of service (QoS) and policy and network management.

-- Siemens' worldwide telecommunications sales and service channels and 3Com's worldwide data networking and service channels in 160 countries.

Expected products include a range of multimedia exchanges for voice and data, LAN telephony gateways and Ethernet phones and adapters packaged and priced to meet the needs of small, medium and very large corporations. Initial applications for these products include voice-enhanced PC collaboration and conferencing, call centers for Internet-based retailers, and customer service help desks for a variety of industries, such as financial services, consumer product manufacturing, healthcare, government and education.

The products will enable business users to make and receive telephone calls from their PCs or Ethernet phones from wherever they connect to a corporate network, share rich voice/video/data applications across the network in real time, and instantly retrieve data and multimedia files related to an incoming caller.

Convergence of voice and data over a single network is expected to offer businesses significant long-term savings over today's separate voice and data networks. Converged networks offer the cost efficiencies of one line for voice and data transmission as well as common equipment, management software and service/maintenance organizations.

Combining Forces for the Converged Networking Market

Siemens and 3Com will co-own the joint venture, which will have its headquarters in the United States, have its own staff and management, and development teams in California, Massachusetts, Germany, Israel and the United Kingdom. The joint venture management will report to a board of directors equally comprised of Siemens and 3Com executives. The initial staff will include more than 200 engineers from the parent companies, many of whom are already experienced in developing converged network products.

Products developed by the joint venture will be branded as the Siemens HiNet product line and the 3Com SuperStack II and CoreBuilder product lines. The products will be sold by Siemens, 3Com and both parties' respective distribution partners. Both companies view their sales channels as complementary, with Siemens strength in direct sales, service and system integration, and 3Com's strength in indirect sales backed up with a growing portfolio of network design, implementation and post-sales customer services.

"The joint venture brings together the best-of-breed talent, experience, core technologies and distribution channels to create the industry's richest set of convergence products and deliver them worldwide ahead of our competitors," said Eric Benhamou, CEO and chairman of 3Com. "Converged networking is the most exciting and fundamental change in networking since the Internet itself. We will fully support customers so they can safely take the first steps into this new era and reap its competitive and cost-savings benefits. As of today, our long-standing partnership with Siemens and, consequently, our own competitive posture, has taken a significant step forward."

"Siemens will provide enterprise network customers with converged voice/data network solutions combining advanced LAN technology from the Ethernet market leader 3Com with benefits customers know and value from their PBX: feature-rich real-time communications and telco-class reliability," said Roland Koch, member of the board of Siemens AG and president of Siemens Information and Communication Networks Group.

"The leading-edge products expected from our joint venture with 3Com will significantly enhance the product portfolio utilized by Siemens sales and service organizations to provide customers with communication solutions combining best-in-class components from all leading vendors. Siemens contributions to the joint venture will protect our customers' investments by ensuring interoperability between the emerging multimedia networks and their PBX infrastructure," added Werner Schmuecking, member of the board of Siemens Information and Communication Networks Group.

About Siemens' Information and Communication Networks Group

The Information and Communication Networks Group of Siemens with approximately 63,000 employees and a business volume of $14 billion (DM 23 billion), is one of the worldwide leading providers of end-to-end solutions for voice, data and mobile communication networks. The Group covers products/systems, solutions and service/support for the installation and maintenance of complete corporate and carrier networks. This includes services and consulting covering aspects from network planning and financial advice through to commissioning and user training. Siemens' Hicom is the worldwide leading private communications system and installed in approximately 120 countries. With more than 175 million line units in over 100 countries, Siemens' EWSD is a successful worldwide digital switching system. For further information, visit Siemens' World Wide Web site at www.siemens.com.

About 3Com Corporation

3Com corporation has more than 200 million customers worldwide. 3Com delivers information access products and network system solutions to large, medium and small enterprises; carriers and network service providers; PC OEMs; and consumers. For further information, visit 3Com's World Wide Web site at www.3com.com.

For more information, call 978/264-1773.
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Publication:LAN Product News
Geographic Code:4EUGE
Date:Jan 1, 1999
Words:1057
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