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On the technology side, Cisco has been aggressively expanding its SMB portfolio over the past two years, with everything from needs-specific switches to emerging physical security products hitting the market.
Its most recent batch of updates included new managed Ethernet switches starting at $287, a network security firewall, and an update for its NSS300 smart storage products that includes fully integrated data backup via Mozy, owned by Cisco strategic partner EMC.
All of Cisco's major SMB product categories are growing, according to executives, and they're seeing increasing demand for niche specialties such as physical security and video, including WebEx, its online meeting and collaboration platform.
Designing products for small business is a tricky tightrope to walk, VARs said, because you have sub-25 customers, sub-100 customers and a range of other customers with markedly different requirements. A very small business might have minimal needs in some areas but might by the nature of its business -- health care or financial data, for example -- require advanced storage networking or security needs.
"You've got to understand it's an extremely diverse market down there," said Cynnex's Halper. "It's a huge mix of different kinds of businesses that have incredibly different needs and incredibly different outlooks on technology. That's very different from the large commercial market and enterprise market where IT decisions are made in similar forms across the board."
The products therefore need to be adaptable and sophisticated, but also easy to deploy, said Ian Pennell, senior vice president of Cisco's small-business technology group.
"This space needs to be able to put things together and have it all be relatively easy to understand," Pennell said. "It's partly about size. You do get some commonality in the sub-20 vs. a 50- or a 100-size company, but it's really more about what they're trying to do and how robust do they need to be. There's an awful lot of diversification."
Cisco's strength with a lot of its small-business products is that they're prearchitected to work together, Halper said. That's consistent with Cisco's macro-level architecture approach to technologies but is especially compelling with small-business customers who don't want to fuss with multiple point products, he said.
"Rather than the customer having to be somewhat responsible for creating the interoperability between vendors' equipment, you're taking that complexity out," Halper said. "You don't want to spend a lot of time on 'how is the switching going to play with this wireless' or 'how is the voice going to traverse my firewall.' "
The ease of integration comes up often among solution providers, agreed D&H's Schwab.
"It's in the sub-100 that they've gained the most traction, and the sub-25 they've had success, too," Schwab said. "I think one of the benefits is that they went after it not just focusing on a switch, but leveraging the full wherewithal of the Cisco portfolio: switching, routing, wireless, security, storage. It makes it easy for a small-business VAR to utilize them for a total solution vs. having to find multiple point products."
Specific to D&H's customers, the number of VARs that sell Cisco small business has grown quarter over quarter, Schwab said, and is now two and a half times bigger than it was two years ago.
"It just makes more sense for us to have an intimate relationship with one manufacturer here than try to create that partnership with three or four different players," Halper said. "VoIP, switching, wireless, we can do all of those things with Cisco with one customer. And then we get the additional benefits from the customer because it's an easy relationship to maintain."
NEXT: Cisco's Small Business Services Advantage