Cisco's Linksys Unit To Offer Converged IP-Hosted Services Platform

In a move that potentially will broaden the appeal of converged data and telecommunications to small and midsize business (SMB) customers, Cisco Systems is launching a new product line through its Linksys division that will let solution providers offer turnkey managed IP voice, data and video communications services.

Long a pipedream of network systems providers and telecommunications providers to bring such capabilities to the mainstream, Linksys has engineered a new integrated architecture and go-to-market plan that company officials believe will draw a large population of SMB customers while providing recurring revenues to partners.

The company's foray into this burgeoning area is centered around its Linksys One platform, which will initially consist of a combined 16-port LAN switch, router and firewall, called the SVR3000 Services Router.

While the router is the heart of the system, it will initially support two key new components: the PHM1200 Color Manager IP Phone and VGA 3000 Analog Voice Gateway. Other functions, such as a VPN gateway and wireless voice and data network capability, will follow, according to company officials.

Through this new product line, VARs will be able to offer combined telephone service, high-speed data networking, security and applications such as e-mail through a common hosted service offered by telecommunications providers with which Linksys has partnered with. Solution providers to date have had few options of providing such integrated services. Bringing this together, company officials say, was not a trivial undertaking.

Linksys One is the first platform jointly developed by Cisco and Linksys engineers, which is significant on a number of fronts. For Linksys, which Cisco acquired nearly two-and-a-half years ago, it is a major push beyond its traditional consumer and retail focus. Moreover, selling such services could potentially cannibalize Cisco's higher end, premises-based Call Manager Express platform.

Cisco executives, however, reject that notion, noting that Linksys One, which can scale to customers with up to 250 employees, is really best-suited to companies that employ less than 100 people for applications such as e-mail, Web site hosting, some video communications and telephony.

In the United States, regional service will be available from airBand Communications and NeoNova, while nationally through MCI. Customers can only procure the managed service through certified Linksys One partners.

While enterprise customers with dedicated IT staffs have the resources to manage more complex communications networks with more dedicated requirements, the market for hosted telecommunications services is projected to grow 70 percent a year, says Nigel Williams, Linksys vice president for channel and service providers.

"We are seeing an increased propensity for hosted solutions in this SMB space today," Williams says. "This is a completely untapped market today." Yet telecommunications providers have struggled for years to convince customers to use carrier-based telephony services, such as Centrex, rather than premises-based telephony equipment, says Matthais, Machowinski, an analyst at Infonetics research.

"Customers have always been reluctant to give up control to the service providers," Machowinski says. Also, customers have also largely rejected the role of running voice over their data architectures, though in recent years larger enterprises have built telephone networks based on IP backbones.

Resolving both traditional objections, the Linksys offering could prove to be more compelling than traditional carrier services, he adds, because it gives customers more control: "With this, you have the phones combined with peer-to-peer switching."

That's significant, Linksys officials say, because if the wide-area network backbone is down, voice and data traffic will still work over the local-area network, and can be switched over to the analog gateway.

In addition to functioning as a 10/100 LAN switch-router, the SVR3000 has built-in quality-of-service capabilities that automatically prioritize traffic. Integrated VLAN capabilities will let administrators manage bandwidth, security and segment services. The router also provides hardware-based encryption, while future iterations will support VPN access and wireless phones. The SVR3000 also supplies power to the PHM1200 phone sets.

Patty Platts, executive vice president of Dallas-based ROI Technology Solutions, which represents just about all of the various IP telephony platforms in the market, says she hasn't seen anything that uses the architecture of the Linksys One offering.

"This is a total network solution rather than a phone system put on a network," says Platts, a Linksys partner who helped in the early development of the platform.

The router is expected to cost about $1,200, with phone sets at around $300 and the analog gateway at $279. Early units will start shipping next month with volumes picking up next quarter.