I don't want to understate what teams have done in the Secure, Converged Network [or SCN, which includes TippingPoint, 3Com VoIP and SMB switching] segment. We've shown two quarters in a row of lower operating loss. And I'm determined to bring this combined SCN entity to profitability. 3Com as a whole had the largest operating-income profitable quarter in over six years. If you look more granularly, SCN showed its best quarter on the bottom line over that same time.
Three elements will bring SCN to profitability. First, we'll increase our top line. Leveraging faster development will allow us to bring solutions to market faster than others. We're already seeing it in areas such as Gigabit Ethernet. We'll start seeing it in further areas such as routing. And we'll see it eventually in next-generation solutions.
The second part is in what I call the midline, gross margin. The strength of the combined organization gives us better advantages and discounts in securing equipment and components. But it also will give us great opportunity to consolidate a lot of activities that are spread out. We have multiple hubs throughout the world. China could prove to be a more interesting place to consolidate one or two of those hubs, which are now in more expensive parts of the world. Secondly, we are using multiple databases [and business applications and systems throughout the company]. This is a good opportunity to look at next-generation, instead of having to rebuild something from scratch
Third, on the IT front, we have data centers that are spread throughout the world. China has low-cost real estate. But more importantly, we have personnel on the ground in Shanghai or Beijing, where we could quickly and easily host some of our capabilities. Those are all being considered.
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