Cisco Primes Linksys For Small-Business Channel

Cisco Systems is strengthening its attack on the small-business market with the launch of a revamped channel program for its Linksys division later this year.

Plans for the new program, which are still being finalized, come as Cisco is increasing its across-the-board focus on small customers under both the Cisco and Linksys brands and setting its sights on rivals.

At an event slated for June 5-6 dubbed Connected Office Day, Linksys plans to unveil the program as well as a second, still-secret program built with Cisco, a Linksys spokesperson said. The channel program is scheduled for a global launch in the fall.

With the new partner program, Linksys plans to build in more emphasis on value instead of volume, rewarding solution providers for increasing their investment in Linksys, said Nigel Williams, vice president of worldwide channels at Linksys.

Linksys will also be rolling out partner specializations and increased marketing support in the form of lead-generation activities and market development funds, he said.

Executives from Cisco, San Jose, Calif., made it clear at this month's channel conference that the company intends to knock rival SMB-focused vendors off its partners' line cards. Instead of working with value-priced players such as Hewlett-Packard, 3Com, D-Link Systems and Netgear, Cisco wants partners to add Linksys, its own lower-cost networking line, to their portfolios.

"If Cisco partners are carrying the Cisco brand and a lower-priced brand, we think they should carry the Linksys brand rather than that other brand," said Charlie Giancarlo, Cisco's chief development officer and president of Cisco-Linksys, at Cisco Partner Summit 2007 in Las Vegas.

At the conference, Cisco blurred the lines between it and its Linksys division by rolling out a VoIP system under the Cisco brand name that targets customers with 16 or fewer users. In the past, Cisco has cut itself off at the 20-user mark, leaving the rest of the small-business market to Linksys.

Now, the overlap is intentional. "We are creating overlap. At a certain business size, let's say 15 users, you will be able to choose from either a Linksys solution or a Cisco solution," Giancarlo said. "A Cisco solution will represent a product line that will scale with your company to very large sizes and allow you to integrate with advanced technologies. ... The Linksys set of capabilities is one that can be managed simply by a nontechnically trained individual."

For small-business channel partners, the increased attention on their end of the market means a plethora of new products, marketing programs and financial incentives. It also means partners are likely going to face pressure to bolster their Cisco allegiance by picking up Linksys products.

It's unclear exactly how Cisco hopes to convince partners to bring Linksys on board if they haven't already, but what is apparent is that the rivals it wants to unseat will not go quietly.

ProCurve Networking by HP, for example, expects to add 2,000 U.S. partners to its current base of 3,000 over the next two years, many of which will be focusing on small and medium businesses, said Wenceslao Lado, Americas vice president and general manager for ProCurve, Palo Alto, Calif.

"We worry always about Cisco, but we count on our channel partners to make business decisions based on what's better for their customers and for their business," Lado said. "A fundamental part of our channel program is to identify how we can work within our partners' business model. ... It is not our value proposition to say our partners need to be in this sector or that type of account or work with those value vendors. We're more the contrary."

Next: Linksys rivals go upstream

At the same time Cisco pushes downstream, some Linksys rivals are pushing up into Cisco's enterprise territory.

D-Link last week inked a distribution deal that will bring its xStack product line to enterprise-focused partners through Westcon Group and its various divisions, including Comstor, which has primarily focused on selling Cisco gear.

"They're really interested in offering an alternative," said Keith Karlsen, executive vice president of D-Link, Fountain Valley, Calif.

Another challenge Cisco faces is one of perception, as many partners view Linksys strictly as a consumer play.

"There's no particular reason we're not working with Linksys. They're probably just not on the radar for us," said Pat Grillo, president of Atrion Communications Resources, a solution provider in Branchburg, N.J., that carries networking products from Cisco and Extreme Networks. "I look at them when I need to set up remote access from my home," Grillo said.

Customers themselves have a similar perception, said Reza Zarafshar, president and CEO of Advanced Computer Concepts, a solution provider in McLean, Va. ACC counts Cisco as the networking vendor it does the most business with but also carries HP's ProCurve gear and signed on with Netgear three months ago.

"We're not against Linksys, but the impression the market has about Linksys is that they're more of a SOHO provider than for business," Zarafshar said. "They have plenty of products that fit well in the SMB space, but they're not seen that way."

ACC looked at the Linksys portfolio but found an opportunity for a closer partnership with Netgear. "Netgear seemed to demonstrate a lot of interest in working with the channel and doing out-of-the-box thinking to create opportunities for us," Zarafshar said.

Other solution providers said they want to see more clarity from Cisco on how it's positioning Linksys.

"I think Cisco's pretty confused about Linksys," said one Cisco partner in a recent interview who asked not to be identified.

While Linksys is trying to promote its own business-class portfolio, Cisco executives and field-sales reps are steering Cisco partners away from the product line, the partner said. "If you're aligned with the [Cisco] field, you had better not sell Linksys because they're not compensated on it," the partner said.

Cisco is re-evaluating its compensation strategy to consider whether sales reps should be eligible for compensation on Linksys business, said Williams.

Further confusion could also be cleared after Cisco decides how much longer the Linksys moniker will even survive.

"We've announced that we are going to migrate all branding toward Cisco, but each of the different [geographic] areas has a different consideration for how fast that will happen," Giancarlo said.

While the Linksys brand is expected to disappear on the consumer side, there is still a chance it will endure for small-business products, he said.

With the investments Linksys has made in products and personnel, it is primed for the fight, Williams said. "We're ready to go after this market with a vengeance."