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U.S. Robotics Targets Profits In New Markets

SCHAUMBURG, ILL. -3Comm spinoff U.S. Robotics has begun to diversify its product portfolio as part of a strategic effort to derive as much as 35 percent of its revenues from the sale of products other than analog modems in calendar 2002, president Van Andrews told TWICE. The percentage is targeted to grow to 60 percent in 2003.

To reduce its reliance on a declining analog-modem market, the company recently launched its first non-modem products: home-PC-network devices using wireless 802.11b HR technology.

By the end of March, the company planned to offer wireless computer speakers, followed in April by a cablemodem and DSL modem. By May 1, the company will offer a wireless Internet solution consisting of a Type II CDPD radiomodem packaged with wireless Internet access. The company is also considering a headphone MP3 portable that uses wireless technology to play back music through a car stereo system.

As its analog-modem sales decline, U.S. Robotics will turn to such products to increase last year’s $500 million worldwide sales volume to $1 billion in 2003 or 2004, said Andrews, formerly senior VP of Gateway’s North America business-to-business unit.

With $500 million in worldwide analog-modem sales in 2000, he said, “We’re a start-up with real revenue and profit.”

U.S. Robotics is leveraging its brand name and worldwide retail distribution, but it’s partnering with engineering and manufacturing companies to bring products to market quickly, he said. “We have brand strength, and retailers like the idea of our name on other products,” he said. The wireless-modem solution, for example, will include a U.S. Robotics-branded Novatel-made Type II CDPD radiomodem and “U.S. Robotics powered by GoAmerica” logo on the box. GoAmerica is the wireless Internet service provider.

“Retailers are trying to consolidate lines, so they’re looking for more from us because we’re strong in analog modems, and our brand is respected,” Andrews said. Unlike many technology companies, he added, “We know how to make money at retail and manage retail channels.”

The partnerships also make it possible for the company to introduce products at a lower cost than it could if it hired hundreds of engineers to design products itself, he explained.

U.S. Robotics commenced operations as an independent company in September 2000 after having been spun off by 3Com. U.S. Robotics is owned by Accton Technology, 3Com, and contract manufacturer Solectron, which is the majority owner.

Since the spinoff, the company’s employment rolls have grown to 270 from 125, and in March it opened an emerging-business center in Irvine, Calif., to house engineering, sales, and marketing employees. The company has also opened a new Schaumburg HQ with R & D facilities.

Eumacom makes the wireless home-network products. Akoo makes the wireless speakers. Acton is making the DSL modem, and Broadcom is supplying the reference design for the cable modem. Eventually, U.S. Robotics will move all of its manufacturing to Solectron.