D-Link says support contracts are an unnecessary cost for SMBs

The future of IT for small businesses has to include straightforward pricing and free (or less expensive) support, according to networking solution company, D-Link Systems Inc. A major part of its “superior economic model” includes no support contracts for maintenance on its products, a departure from D-Link’s competitors’ methods.

The company presented its case to a small crowd of IT professionals during the Toronto iTech Summit on April 7, citing information from Stamford, Ct.-based research firm Gartner Inc. Last November, Gartner released a report panning the single-vendor model used by some large companies.

Many of D-Link’s competitors are charging businesses for support that should be free like maintenance to hardware, according to the company’s account executive, Simon Whiston. Whiston likens it to a consumer paying every time they need an Adobe or Microsoft update.

Maintenance costs are usually 10 to 20 per cent of the equipment’s cost, according to Whiston. Cisco’s Smart Foundation service for SMBs uses a flat rate per device.

So how are companies justifying charging for something that should be free? “A lot of end users are asking the same question,” Whiston says.

Related story: Cisco to stay out of the services business

“In the networking space there are a host of offerings,” he says, but many are proprietary solutions. The problem comes when such companies don’t allow users to view the other options for maintenance. “They lock you in,” he says.

The contracts tend to act as a sort of insurance policy for businesses, but the cost is too high for businesses with limited budgets, he says. SMBs can get good service without being stuck in an expensive contract, he says.

Some organizations will even buy extra equipment to avoid maintenance costs, he says. A school board might buy extra networking switches in case one goes down to save on maintenance costs and time, according to Whiston.

Diane Jackson, an independent IT consultant who attended D-Link’s presentation says she agrees with the contract-free philosophy and says not having to pay for that maintenance is a “huge bonus” for SMBs. “No one has extra money right now,” she says.

Lower cost does not mean lower quality, he says. D-Link does offer on-site service for its customers and offers a four hour response time. Some of the jobs that D-Link offers on-site maintenance for are typically too small for larger vendors to send anyone.

SMBs make up about half of D-link’s customer base and the company is well known within that world. Appealing to larger enterprises is more challenging for the company, Whiston says. Larger businesses typically care more about the brand, which is why they gravitate towards companies like Cisco, he says.

“It is perceptions more than anything else,” says Daniel Snell, director of field sales engineering for D-Link. A tougher economic climate is slowly changing that, though. During and shortly following the most recent recession, Whiston says D-link gained customers who switched over from larger providers.

Harmeet Singh is a Staff Writer at ITBusiness. Follow her on Twitter, and join the IT Business Facebook Page.

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Harmeet Singh
Harmeet Singh
Harmeet reports on channel partner programs, new technologies and products and other issues relevant to Canada's channel community. She also contributes as a video journalist, providing content for the site's original streaming video. Harmeet is a graduate of the Carleton University School of Journalism.

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