Linksys Hits Hosted VoIP

Linksys is asking its partners to sell bundles that combine its new Linksys One product family with hosted VoIP services from partners such as MCI. But instead of making money on hardware, Linksys is pushing its partners to shift to an agent-like recurring revenue model paid by the teleco.

Jim Wyborny, president of ExpedIT Solutions, a partner in Carrollton, Texas, said that while he still makes decent margin on hardware, he&'s more interested in the potential of selling services. “We&'d like to take advantage of the opportunity to become a hosted service provider and have monthly revenue coming in,” he said.

Some VARs anticipate growing pains as they transition from hardware sales to services. Wyborny said he plans to hire up to five salespeople with certification and training to sell services.

Another wild card is whether VARs can count on telecom giants, who have repeatedly lowered agent fees or dropped them altogether, to stay the course.

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David Lafferty, director of sales at Dallas CLEC Call One, said there&'s a learning curve associated with working with the larger carriers. “We have existing reseller relationships with MCI and other carriers, but I would be concerned [about joining Linksys One] if we didn&'t have that relationship already in place.”

The new Linksys One all-in-one service routers, IP phones and VoIP gateways are the cornerstone of a new SMB business unit within Linksys, a move to expand beyond its traditional consumer/SOHO focus.

At the same time, Cisco itself sees so much potential that it is creating a new Advanced Technology dubbed Hosted Small Business Systems around the product line, its first new one in 18 months. Advanced Technology is Cisco&'s designation for product groups it expects to grow into billion-dollar annual businesses.

For solution providers, the new model should prove more profitable, as they no longer have to take title of hardware and can reduce investments in high-end technical skills, said Nigel Williams, president of service provider and channel operations at Linksys. For service providers, the strategy opens up the channel as a means of reaching the SMB market, he said.

“The end-user relationship absolutely is still with the VAR,” Williams said. “Our go-to-market strategy is built on my belief that service providers will move from direct to indirect [SMB sales].” The “sweet spot” for Linksys One is companies with five to 50 seats, he said.

MCI, now merging with Verizon, plans to add other applications such as hosted CRM and ERP.

Williams expects 15 percent of Linksys&' 6,000 channel partners to join the program, as well as some Cisco VARs.

Pricing for Linksys One hardware will be about $200 to $400 per seat. Pricing for MCI's service bundle, including hardware and services, will be less than $1,000 per month for approximately 16 end users.