Opinion - Taking on Goliath

The 3Com/US Robotics management would have us believe that their marriage fundamentally changes the landscape of the networking industry. The $6.6bn (#4bn) share-swap is the largest-ever merger in the short history of networking, and creates a company with an annual turnover of about $5bn.

But does it really raise the stakes against Cisco, as so many have suggested?

Probably not. Certainly, both companies can flex their muscles, but while the 3Com/US Robotics combo turns over $5bn collectively, Cisco should have no trouble reaching sales of $6.5bn this financial year.

US Robotics still relies on sales of modems with next-to-nothing margins for 50% of its turnover. And 40% of 3Com's sales come from network adaptor cards, while 60% comes from low-end hubs and routers. Cisco's products span a much wider range - to this end it bought ATM and WAN switching supplier Stratacom for more than $4bn last year.

But the consolidation throughout the networking market will continue. To quote Sun Microsystems' Scott McNealy - and many others since - 'the network is the computer'. That's one dictum with which no-one can argue.