3Com refocuses on brand in wake of its Palm spinoff

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When Bruce Claflin succeeds Eric Benhamou as 3Com Corp.'s CEO later this year, he'll have the hefty challenge of leveraging the halo of its spun-off Palm unit while building a new company image.

"We want the good will to reflect on the company, not outshine it," said Mr. Claflin, now president-chief operating officer. But the high-flying Palm, marketer of the hot handheld digital organizer that appeals to techies and fashionistas alike, has already managed to eclipse 3Com in the few months since its spinoff. Mr. Claflin also needs to convince a skittish Wall Street that he's finally taking the company in the right direction after years of flat sales and shifting business strategies.

After three years of stagnant sales, 3Com restructured in March, selling its flagging high-end modem and corporate networking business, leaving industry heavyweights Cisco Systems, Lucent Technologies and Nortel Networks to slug it out among themselves. The company then set its sights on emerging technologies for the home and small-business markets, launching a $100 million global image push Aug. 10 via Lowe Lintas & Partners Worldwide, New York.

"In our zeal to promote modable technology, we diffused our brand," Mr. Claflin said at the Association of National Advertisers gathering two weeks ago. He said the wildly popular Palm line was "distracting us from our core business," even though it contributed to about 9% of the $10 billion networking company's revenue. Post spinoff, Mr. Claflin said, "We are now brand-driven rather than technology-driven."


3Com has more than doubled ad spending this year behind its global brand campaign promoting the idea of simple and universal connectivity in a variety of settings -- at home, in the office and on the road. 3Com's new Ergo consumer product line debuted recently with Audrey, a home Internet appliance designed to help the company make the abstract concept of networking and Internet connectivity come alive.

"Internet access for home networking is a big part of 3Com's growth plan," said Erik Suppiger, research analyst, Chase H&Q. "Appliances make use of the Internet more convenient," he said.

Cahners In-Stat Group estimated the five-year growth rate worldwide for line-power Internet appliances at 73%. While the potential is huge, "We have no illusions we will control the device business," Mr. Claflin said.


Neatly encased in a trapezoid-shape box, Audrey features an 8-inch touch screen and tuning knob with a hideaway wireless keyboard. Its built-in 56K modem syncs with Palm handheld devices, an added bonus. Positioned as a "digital nerve center" for the home, 3Com's $500 Audrey promises access to family calendars, e-mail and pre-set Internet channels with the touch of a button and without booting up.

Print ads running in monthlies such as Vanity Fair take a lifestyle-oriented, humanistic approach. One spread ad shows a clutter of notes, schedules, photos and other miscellany posted on a refrigerator. On the next page, the Audrey unit is positioned in the center of a clean, white page. Copy asks, "Audrey, anyone?" followed by 3Com's tagline, "Simple sets you free."

TV spots extending the print themes break just before Thanksgiving on cable lifestyle channels. A direct campaign targeting Palm users from Lowe Direct, New York, and Internet work from MarchFirst, Chicago, complement the effort.

"We targeted families with two or more PCs or those who had Palm-style devices," said Jan Soderstrom, senior VP-marketing and brand management at 3Com.

Next up in the Ergo line is 3Com's Kerbango Internet radio later in the year.

Contributing: Tobi Elkin.

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