OK, I didn't read this in a fortune cookie, but I have heard it from multiple sources in the analyst community over the last weeks that 3Com is spinning off Tipping Point. I guess someone had to pay for buying out the Huawei partnership. Seriously, lets look at what this could be about. First of all I understand at first blush that this could look like the EMC-VMWare spin-off, where EMC is just selling 10% of the company off. I understand that initially 3Com will spin off just a % of Tipping Point. But my sources tell me that the plans are that they will follow this by selling most or all of their stake in the IPS vendor. Background is that 3Com paid 425 million for Tipping Point just about 18 months ago.
So why would 3Com do it. Do they need the cash? Spin off Tipping Point, establish a market value and then sell stock off in TP piece meal, like going to the piggy bank. I thought they actually had secured funds for the Huawei purchase and were actually still sitting on a ton of cash, so I don't think that is the issue. Do they think Tipping Point is past its prime? IPS is increasingly a commodity business, even at the top end and can Tipping Point continue to grow at past rates? Tipping Point has tried to break out beyond IPS into NAC. But in my opinion their NAC product was far from best of breed. What do they do to follow up IPS? They have tried to move into UTM, but with Fortinet, Cisco, etc. that is another rough market. Much of their special sauce seems to work only on 3Com switches. Maybe the 3Com folks think they can pull out the most value from spinning it off now, before the bloom is off the rose.
Here is another possibility. Can it be that despite best efforts, it was just a case of irreconcilable differences in culture. No matter how big the merger, if corporate cultures clash, it just doesn't work. With 3Com up in Massachusetts and the TP gang down in Texas, could they not work out the roles and get the organizations on the same page,acting as one company? In my opinion, the Tipping Point folks have always been embarrassed and reluctant to acknowledge that they were part of 3Com. Current 3Com CEO, Edgar Masri has his roots in the 3Com switch and network business. I don't know for sure, but that could be the real reason for this.
In the interests of full disclosure, StillSecure is partnered with 3Com. We also compete with Tipping Point in the IPS market with our Strata Guard product. We have dealt almost exclusively with the switch folks up in HQ and have not dealt much with the TP folks. The switch folks we have met are on the ball and seem to know what they want. Recently, 3Com has made some aggressive moves in both the SMB and enterprise switch and network gear business. In the far east they are still a power and of course the Huawei partnership business has a lot of upside they say. A 3Com without Tipping Point, I think is still a powerhouse in the network space. A Tipping Point without a 3Com big brother is going to have to go head to head with some bigger players in the crowded IPS space like IBM/ISS, McAfee, Cisco, etc. They could be just another player in a crowded field.
As usual, time will tell. Stay tuned for more details.
Authors note: After publishing I see that Mitchell wrote his own story on this based not upon my sources but from a Edgar Masri interview. I guess that makes it official.