Confidential Work Product
Filed by 3Com Corporation
Pursuant to Rule 14a-12
of the Securities Exchange Act of 1934
Subject Company: TippingPoint Technologies, Inc.
Commission File No.: 001-15715
TIPPINGPOINT Q&A
12/13/04
GENERAL
Q1. WHY A SECURITY ACQUISITION?
Security and networking are converging to better protect an organization's
investment in the network from increasingly sophisticated attacks originating
from inside and outside the four walls. The network perimeter is dissolving due
to remote and wireless access and e-business requirements, requiring security
that goes beyond the perimeter into the core of the network.
Security must operate in real time and integrate into and behave like networking
infrastructure, rather than be added on as an afterthought or be reliant on
notoriously flawed operating systems
Best-of-breed, purpose-built security technology is winning over commoditized,
general-purpose solutions in large enterprise installations
Q2. WHO IS TIPPINGPOINT?
Founded in 2001, TippingPoint pioneered and quickly became a leader in
next-generation Intrusion Prevention Systems (IPS) as the only pure-play IPS
vendor. TippingPoint launched the first IPS in 2002. The company is based in
Austin, TX.
The company's purpose-built hardware with custom-designed silicon creates the
Threat Suppression Engine, which can perform thousands of checks on each packet
flow simultaneously with extreme accuracy and no latency.
TippingPoint solutions begin blocking attacks in real time with 600 different
filters right out of the box, no configuration necessary
Its Digital Vaccine Service delivers new filters on a weekly or even daily basis
to maintain evergreen protection for the latest vulnerabilities, exploits,
viruses and rogue applications.
Q3. WHY TIPPINGPOINT?
TippingPoint is the leading provider of network-based intrusion prevention
systems. TippingPoint solutions are truly best of breed.
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o TippingPoint products have been widely recognized for their excellent
engineering and performance TippingPoint is the industry's only pure-play
IPS vendor
o Unparalleled IPS heritage leveraging expertise in hardware, software,
security, management
o TippingPoint offers sophisticated, purpose-built hardware-based network
intrusion prevention systems
TippingPoint serves Global 2000, including some of the world's largest
companies.
Q4. WHY DID 3COM BUY TIPPINGPOINT? WHY DIDN'T SOMEONE ELSE BY TIPPINGPOINT?
TippingPoint technology is most relevant for a network-centric company. 3Com is
ahead of the trend in providing security products that are network-based, which
behave and function like networking gear. Software security companies don't have
a networking model. TippingPoint can have an impact at 3Com with real potential
upside, whereas TippingPoint would disappear at a Symantec or Cisco.
Q5. WHY IS THE COMBINATION BEING PURSUED AS AN ACQUISITION RATHER THAN A
PARTNERSHIP?
IPS is core technology to securing data and voice networks and is migrating to
network infrastructure - hence the need to own the IP versus a partnership.
Q6. WHAT IS THE MARKET OPPORTUNITY?
The total addressable market for IPS is significant and growing each year
($274MM TAM growing at 76% CAGR according to Infonetics Research). In-line IPS
is the fastest growing segment of the IDS/IPS market.
TAM for IPS expands substantially in the future as security IT budgets are
redirected from several areas (AV, Firewall, IDS, DDos, Bandwidth Management,
Host Based Solutions, etc.)
Q7. HOW DOES THIS TRANSACTION FIT INTO 3COM'S STRATEGY FOR SECURED, CONVERGED
NETWORKS?
Both companies understand the potential and significance of the fast emerging IP
telephony and WLAN markets and the unique security demands this places on
converged networks. TippingPoint's industry leadership position in in-line IPS
combined with 3Com's IP Telephony and WLAN product portfolio will allow us to
secure converged networks - voice and data, wired and wireless. Additionally
leveraging the TippingPoint IP will enable 3Com to develop more fully integrated
infrastructure solutions to protect the converged voice and data network.
Both 3Com and TippingPoint early on identified VoIP as a strategic area of
focus.
o Broad set of filters to protect VoIP vulnerabilities already developed
o Other VoIP security initiatives already underway and well developed
Q8. WHY IS NOW THE RIGHT TIME?
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With the rapid convergence of networking and security, the acquisition of
TippingPoint made sense strategically and financially. Our customers are
increasingly asking for this kind of integration and the large enterprise has
been an early adopter of converged secure networking solutions.
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Security and networking are converging to better protect an organization's
investment in the network from increasingly sophisticated attacks originating
from inside and outside the four walls. The market is transitioning from early
adoption to broad adoption and now is the time to accelerate globally.
TippingPoint's best-of-breed IPS solutions offer superior protection from
sophisticated attacks for today's converged voice and data networks.
Security must operate in real time and integrate into and behave like networking
infrastructure, rather than be added on as an afterthought or be reliant on
notoriously flawed operating systems. TippingPoint products operate in real time
and function like networking infrastructure.
Bottom line, TippingPoint products offer the best line of defense against
increasingly sophisticated attacks that originate from multiple points within
and without the network. TippingPoint IPS helps better protect a company's
investment in its network.
Q9. WHO ARE TIPPINGPOINT'S COMPETITORS?
McAfee. ISS. Juniper. Cisco in the near future.
Q10. DOES THIS MEAN THAT 3COM IS GETTING MORE INTO THE SOFTWARE BUSINESS?
TippingPoint products are network-based and delivered on a purpose-built
solution with a powerful custom-designed silicon. TippingPoint's industry
leading hardware IPS solution is a strategic fit with 3Com's networking product
portfolio and the company's Pervasive Security Strategy.
Q11. HOW WILL THIS HELP 3COM GAIN TRACTION AND MARKETSHARE?
With the rapid convergence of networking and security, the acquisition of
TippingPoint made sense strategically and financially. 3Com customers are
increasingly asking for this kind of integration and the large enterprise has
been an early adopter of converged secure networking solutions. Additionally,
the large enterprise market demands best-of-breed security technology.
TippingPoint IPS is definitely best of breed and helps 3Com gain further
credibility with and entrance into the large enterprise space. It also provides
an expanding revenue stream.
Q12. WHY DID TIPPINGPOINT SELL?
3Com's scale of operations significantly improves TippingPoint GTM (go to
market) capabilities.
o 3Com's superior manufacturing, supply chain and sales support resources
drives TippingPoint production costs down
o TippingPoint taps 3Com's significantly more robust professional services
infrastructure
o TippingPoint executives can contribute their security expertise to 3Com as
the leaders of 3Com's security division
o Long term, expands opportunities for SMB market penetration
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Q13. WHEN WAS TIPPINGPOINT FOUNDED?
2001
Q14. DOES TIPPINGPOINT HAVE ANY STRATEGIC PARTNERS?
TippingPoint does not have any partnerships that substantially conflict with
3Com. TippingPoint does benefit from strong channel partnerships, and some
technology partnerships as well.
CUSTOMERS AND PARTNERS
Q1. WHO WILL SELL SECURITY SOLUTIONS?
TippingPoint clients continue to have access to the same best-of-breed IPS
products through the same TippingPoint high-touch sales force and TippingPoint
channel partners will all be authorized and will be the principle source to sell
TippingPoint products. Over time we will selectively add channels where
appropriate.
TippingPoint will be able to take advantage of 3Com Channels to expand pathways
to market for TippingPoint globally. Additionally, TippingPoint Direct Touch
Security specialists will be leveraged to market to SP's and large enterprises
along with 3Com sales and partners.
3Com can leverage its presence in EMEA and APR to speed up GTM for TippingPoint
IPS and expand the global footprint for IPS.
Q2. HOW DOES THIS AFFECT THE CROSSBEAM RELATIONSHIP?
This is complementary to Crossbeam. Checkpoint firewall is the killer app from
Crossbeam. Crossbeam doesn't do IPS. 3Com will continue to market and sell the
Crossbeam products as they have been doing.
Long-term, 3Com can offer a TippingPoint blade for the 6200.
Q3. HOW DOES THIS BETTER POSITION 3COM AGAINST THE COMPETITION?
TippingPoint is widely recognized as having the best IPS solutions in the
industry. IPS is core technology to securing data and voice networks and is
migrating to network infrastructure. 3Com can now provide a more competitive,
best-of-breed security via its new division and ultimately deliver highly
integrated networking products to secure voice and data networks.
3Com will be ahead of the competition in employing easy-to-use and manage,
purpose-built hardware with custom-designed silicon.
Q4. WHO ARE TIPPINGPOINT'S CUSTOMERS?
TippingPoint markets and sells to the Global 2000.
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Q5. WILL TIPPINGPOINT PRODUCT(S) BE SOLD BY A SEPARATE TIPPINGPOINT SALES
ORGANIZATION?
TippingPoint clients will continue to have access to the same best-of-breed IPS
products through the same TippingPoint high-touch sales force and TippingPoint
channel partners will all be authorized and will be the principle source to sell
TippingPoint products.
Over time we will selectively add channels where appropriate. Existing and
future customers will be able to take advantage of new choices for secure,
converged voice and data portfolios.
Q6. WILL TIPPINGPOINT'S PRODUCTS BE SOLD TO THE SMB MARKET? THE ENTERPRISE?
Long term there will be opportunity for TippingPoint to expand its products into
the SMB market.
Q7. WHAT VERTICAL MARKETS DOES TIPPINGPOINT SELL INTO?
Along with Fortune 500 companies, TippingPoint has had success in the education,
retail, healthcare and financial/banking vertical markets, as well as service
providers.
Q8. DO 3COM AND TIPPINGPOINT HAVE MUTUAL CUSTOMERS?
There is very little overlap in the 3Com and TippingPoint customer bases.
TippingPoint has made significant inroads with the world's largest enterprises,
organizations and service providers. 3Com is committed to the better serving the
large enterprise market and this acquisition is a key milestone in that
commitment. TippingPoint has very little SMB market penetration compared to
3Com.
Q9. WHY DO CUSTOMERS NEED TIPPINGPOINT'S SOLUTIONS?
Security and networking are converging to better protect an organization's
investment in the network from increasingly sophisticated attacks originating
from inside and outside the four walls. TippingPoint's best-of-breed IPS
solutions offer superior protection from sophisticated attacks for today's
converged voice and data networks.
Security must operate in real time and integrate into and behave like networking
infrastructure, rather than be added on as an afterthought or be reliant on
notoriously flawed operating systems. TippingPoint products operate in real time
and function like networking infrastructure.
Bottom line, TippingPoint products offer the best line of defense against
increasingly sophisticated attacks that originate from multiple points within
and without the network. TippingPoint IPS helps better protect a company's
investment in its network.
Q10. HOW MANY CUSTOMERS DOES TIPPINGPOINT HAVE?
TippingPoint has hundreds of customers.
Q11. WILL 3COM SUPPORT TIPPINGPOINT'S PRODUCTS VIA ITS AGREEMENT WITH SIEMENS?
3Com's intent is to offer global service/support for the TippingPoint products.
This is likely to involve the Siemens relationship.
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TECHNOLOGY-PRODUCTS
Q1. HOW WILL THE PRODUCTS BE INTEGRATED INTO 3COM'S PORTFOLIO?
TippingPoint clients will continue to have access to the same best-of-breed IPS
products through the same TippingPoint high-touch sales force and TippingPoint
channel partners will all be authorized and will be the principle source to sell
TippingPoint products.
Solutions that combine current TippingPoint and 3Com products for Enterprise and
SP markets as appropriate will be the primary manifestation. Immediate synergies
include tapping TippingPoint's sophisticated VoIP filters to enhance 3Com's
robust IP telephony platform.
Overtime we plan to introduce all-in-one security appliances for security
market; integrated management - single platform to provide network and security
management. Then, blades and modules for infrastructure solution would be
developed
Q2. IS TIPPINGPOINT'S TECHNOLOGY ARCHITECTURE COMPLEMENTARY TO 3COM'S?
Highly complementary. TippingPoint has purpose-built, network-based IPS
solutions that function like standard networking infrastructure. Also, the
management of TippingPoint products will be integrated into 3Com's network
management software.
Ease of use is a fundamental component of product development for both
companies. TippingPoint solutions begin blocking attacks in real time with 600
different filters right out of the box, no configuration necessary. TippingPoint
provides seamless updates provided through Digital Vaccine Service.
ORGANIZATION
Q1. HOW WILL TIPPINGPOINT'S FIT INTO 3COM'S ORGANIZATION?
TippingPoint will be operated as a division of 3Com. The existing TippingPoint
executive management team will remain in charge of the same components of
operations as they are today.
o TippingPoint's CEO, Kip McClanahan, will become President of 3Com's
Security Division and report to 3Com CEO, Bruce Claflin.
o TippingPoint's sales organization will not change other than through growth
o TippingPoint will continue to operate as a distinct and largely autonomous
business, in close coordination with 3Com's operations.
Q2. WHAT HAPPENS TO THE TIPPINGPOINT COMPANY AND PRODUCT LINE NAMES?
We are evaluating all the branding ramifications but we anticipate we will
leverage every advantage from the TippingPoint business, which includes many of
it successful brands.
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Q3. IS 3COM CREATING OTHER DIVISIONS?
We already have expertise in 3Com's other strategic areas such as wireless and
voice, which will continue to operate with focus on their respective markets
Q5. WHAT WILL BE THE ROLE OF THE TIPPINGPOINT EXECUTIVES?
TippingPoint's CEO, Kip McClanahan, will be president of 3Com's new security
division. Additional announcements regarding other TippingPoint executives will
be made shortly and we anticipate that all key executives will be staying on as
part of the 3Com team. There is exceptional commitment and motivation for all
employees to succeed.
Q6. HOW MANY EMPLOYEES DOES TIPPINGPOINT HAVE?
TippingPoint has approximately 125 employees, mostly located in Austin, with
sales and field representatives located throughout the US and international
locations.
Q7. WHERE ARE TIPPINGPOINT'S OFFICES? WILL THEY MOVE TO MARLBOROUGH OR ANOTHER
3COM LOCATION?
TippingPoint's headquarters are located in Austin. They will remain there and
will become 3Com's security division.
Q8. WHAT RELATION, IF ANY, WILL THIS HAVE TO THE 3COM JV?
Huge opportunities exist for leveraging the JV to drive IPS technology. Clearly
we will be looking for all appropriate means to cross leverage the two teams.
THIS PRESS RELEASE INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. THE
FORWARD-LOOKING STATEMENTS CONTAINED HEREIN INCLUDE STATEMENTS, WITHOUT
LIMITATION, REGARDING: THE CONSUMMATION OF THE PENDING ACQUISITION OF
TIPPINGPOINT BY 3COM, THE EXPECTED BENEFITS AND SYNERGIES OF THE PENDING
ACQUISITION AND THE EXPECTED TIMING OF THE CONSUMMATION OF THE ACQUISITION;
MARKETS AND MARKET GROWTH, PARTICULARLY IN THE IPS AREA; TECHNOLOGIES,
PRODUCTS, SOLUTIONS, CUSTOMERS AND MANAGEMENT OF TIPPINGPOINT, 3COM AND THE
COMBINED COMPANY; 3COM'S COMPETITIVE POSITION; TIPPINGPOINT'S PROFITABILITY;
INTEGRATION OF PRODUCTS WITH RESPECT TO THE COMBINED COMPANY; AND THE
LIKELIHOOD OF LAYOFFS. THESE STATEMENTS ARE SUBJECT TO INHERENT RISKS AND
UNCERTAINTIES THAT COULD CAUSE THE ACTUAL RESULTS OF 3COM TO DIFFER
MATERIALLY FROM THOSE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING
STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, THE
FOLLOWING: APPROVAL OF THE ACQUISITION BY THE STOCKHOLDERS OF TIPPINGPOINT;
THE SATISFACTION OF THE CONDITIONS TO THE CLOSING OF THE ACQUISITION,
INCLUDING THE RECEIPT OF REGULATORY APPROVALS; THE ABILITY TO REALIZE THE
ANTICIPATED BENEFITS OR SYNERGIES OF THE TRANSACTION IN A TIMELY MANNER OR AT
ALL; FLUCTUATIONS IN THE DEMAND FOR THE PRODUCTS OF THE COMBINED COMPANY;
POSSIBLE DEVELOPMENT OR MARKETING DELAYS RELATING TO PRODUCT OFFERINGS OF THE
COMBINED COMPANY; THE INTRODUCTION OF NEW PRODUCTS OR TECHNOLOGIES BY
COMPETITORS; AND TECHNOLOGICAL TRENDS IN THE NETWORKING INDUSTRY. ADDITIONAL
INFORMATION RELATING TO THE
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UNCERTAINTY AFFECTING TIPPINGPOINT'S AND 3COM'S BUSINESSES ARE CONTAINED IN
THEIR FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION. ANY
FORWARD-LOOKING STATEMENT SPEAKS ONLY AS OF THE DATE ON WHICH SUCH STATEMENT
WAS MADE, AND 3COM DOES NOT UNDERTAKE ANY OBLIGATION TO (AND EXPRESSLY
DISCLAIMS ANY SUCH OBLIGATION TO) UPDATE ANY FORWARD-LOOKING STATEMENT TO
REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON WHICH SUCH STATEMENT WAS
MADE, OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
ADDITIONAL INFORMATION
In connection with the merger, TippingPoint will be filing a proxy statement and
other relevant documents concerning the transaction with the Securities and
Exchange Commission (SEC). STOCKHOLDERS OF TIPPINGPOINT ARE URGED TO READ THE
DEFINITIVE PROXY STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
The proxy statement and other relevant documents may be obtained free of
charge by directing a request to William Murphy at (512) 681-8320. In addition,
documents filed with the SEC by TippingPoint will be available free of charge
at the SEC's web site at http://www.sec.gov.
Information regarding the identity of the persons who may, under SEC rules, be
deemed to be participants in the solicitation of stockholders of TippingPoint in
connection with the transaction, and their interests in the solicitation, will
be set forth in a proxy statement that will be filed by TippingPoint with the
SEC.