Cisco makes a connection with untapped SMB market

SANTA CLARA, Calif. — Cisco Systems Inc. is putting more effort into selling products to organizations with fewer than 1,000 employees, and one analyst says the manufacturer needs to build less expensive products specifically tailored for that sector of the market.

“”The trick with the (small-

to mid-sized) market is to find a way to serve them where you both give them what they need product-wise and relationship-wise, and recognize that they don’t have a lot of money to spend,”” said Jan Dawson, Boston-based telecom research director of Ovum, a British technology market research firm.

Dawson, who attended Cisco’s worldwide analyst conference, said buyers in small- to mid-sized organizations tend to think of Cisco’s products as high-end.

“”The brand is associated with enterprise-type products, and the big problem with the SMB market is they’ve been historically underserved,”” he said, adding vendors try to sell products that are unsuitable because they are just “”toned down”” enterprise products.

“”It’s either too expensive — it’s costed out at an enterprise level — or it’s not functional enough because they’ve stripped it down,”” he said. Dawson added small- to mid-sized organizations should be in the market for security and Internet Protocol telephony products, if they have high-speed connections.

“”No matter how small a company you are, the minute you are on a network of any kind, you need security,”” he said. “”The minute you have an always-on network, you’re vulnerable to all kinds of security risks.””

Cisco announced 20 additions to its Catalyst switching line aimed at the business market. The Catalyst Supervisor Engine 32, for example, lets users add security features, such as denial of service protection, to the switch. Another product set aimed at the commercial market is the Integrated Services Router (ISR) series announced earlier this year, said Peter Alexander, Cisco’s vice-president of commercial worldwide marketing.

Alexander said 87 per cent of U.S. companies with fewer than 150 employees have never bought Cisco products.

“”That represents a huge opportunity, and that’s what we’re going to focus on,”” he said, adding his company will try to sell existing customers more products.

For example, a customer who buys Cisco switches and routers may also be interested in Wi-Fi and IP telephony, Alexander said.

No longer too Complex

He added many mid-sized organizations are now looking at high-end software like enterprise resource planning and customer relationship management. Five years ago, these technologies were too complex for firms of this size, he said.

During a presentation at the worldwide analyst conference last month, Alexander said the networking market for SMBs is growing at 20 per cent per year. John Chambers, Cisco’s president and chief executive officer, said in the next few years, the company will focus more on providing SMBs with technology they need.

“”Small to medium companies will be where the majority of people are employed when growth occurs,”” Chambers said during a briefing last month.

Chambers said he is no longer optimistic he can form a partnership with competitor Nortel Networks Corp., which is currently in a mad scramble to correct financial statements from previous years.

Chambers said he has been trying to form a strategic partnership with Nortel for 10 years but Nortel officials are not interested.

“”I have a great deal of respect for (Nortel CEO) Bill Owens,”” Chamber said. “”He’s a class act, and they’ve got engineers, and I’ve been up-front with that.

“”I’ve been at the altar waiting for a long time to partner with Nortel, and my views have not changed.””

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