There's Small, And Then There's Small

n the ongoing saga of enterprise vendors entering the small-business space, Cisco’s recent forays are particularly interesting. Time will tell if Cisco succeeds or fails in the small-business market, but how the company moves forward with its plans will determine whether the efforts are successful in the eyes of channel partners.

In its push for a piece of the SMB space, Cisco is going after the Cadillac buyers of the networking world, keeping its focus on the high-value, high-price end of the market. To gain those customers, Cisco is looking to recruit new channel partners with knowledge and understanding of that market. That’s smart.

I’m sure there are small businesses out there that will pay top dollar for networking gear. But there is also a huge pool of small businesses out there that are looking for value.

Those customers, according to Cisco, will fall into the Linksys camp. Officially, Cisco is now saying that customers who want end-user-managed hardware that is easy to use and deploy will turn to Linksys and customers who want professionally installed and managed gear will turn to Cisco.

Unofficially, a lot of Cisco VARs that deal with Linksys at all lead with Cisco and offer Linksys to the “cheap customer.” Meanwhile, Linksys is generating some 45 percent of its revenue from its small-business line. Despite that fact, there is just 2 percent overlap in VARs registered with Linksys and with Cisco, according to Linksys.

While the companies have devised a trade-up rebate program for customers that move from Linksys to Cisco, there is little going on to coordinate that effort in the channel.

If Cisco is serious about small business, it needs to take its Linksys division, as well as Linksys partners and their customers, as seriously as it takes the big spenders. It’s going to take more than a simple trade-up program to do that.

Larry Hooper is managing editor/news at CRN. Contact him via e-mail at lrhooper@cmp.com.

 Published for the Week Of October 11, 2004