CRN Interview: Netgear CEO Touts Future of Wireless

In the 10 years since Netgear was founded, Chairman and CEO Patrick Lo has watched it grow from fresh-faced startup to a company with 35,000 solution provider partners worldwide.

Now Netgear is banking on channel partners to help it build as strong a business in SMB wireless products as it has in wired networking, Lo said in an interview with CRN.

In the spotlight now is Netgear's new RangeMax NEXT lineup of wireless products, which is based on the draft of the 802.11n high-speed WLAN standard. For partners, the new gear brings a tremendous opportunity to provide all-wireless networking environments to the vast spread of SMB customers that aren't yet networked at all, Lo said.

As part of a year-long celebration of the anniversary of its January, 1996 incorporation, Netgear Wednesday night hosted an event in San Jose, Calif., designed to showcase its RangeMax NEXT portfolio that included the first public demonstration of the new products, launched in April. The demonstration aimed to quell concerns that draft-compliant equipment has interoperability problems.

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Lo spoke via telephone with CRN Infrastructure Editor Jennifer Hagendorf Follett ahead of the event about the wireless opportunity for channel partners, the company's 10-year milestone and where the Santa Clara, Calif.-based networking vendor goes from here. Edited excerpts of the conversation follow.

CRN: So you're planning a big event tonight?

Lo: Yes, we're very excited about tonight's event. It has been 10 years and that's a milestone. We're also introducing to the world the new Wi-Fi platform, the draft 11n, and we have all the chip vendors participating showing all of the interoperability and all of the great things that can be done on that 11n platform A lot of people don't believe that the draft 11n chips from Marvell will interoperate with those from Aetheros, will interoperate with those from Broadcom, will interoperate with those from PC vendors that are built in. Tonight we'll demonstrate that they can, at a very high speed, to dispel some of the naysayers in the market.

CRN: Which chips are your products based on?

Lo: We have products based on all three [vendors'] chips.

CRN: What's the implication of this new technology for your channel partners? What's the opportunity for them?

Lo: I think it's a tremendous opportunity for our channel partners. You probably know that among small businesses defined by some industry analysts as 500 employees and below, only about 40 percent of them are networked and the other 60 percent are not networked. There are many reasons: cost is one, usability is another. So now, you don't have to spend $150 per wiring, and you don't have to spend that wiring cost every other year when you move. So the VARs can say 'hey, I can do the whole thing for you. You don't have to hire me and then hire some electrician to do the wiring. Me, the VAR, alone can do the whole thing for you and guess what? Two years from now, if you want to move to a new office, I can easily come in and move the whole thing for you in half a day.'

So cost-wise it's significantly better and they can tell them that this one network will do everything they need: VoIP, data backup, serving the Web, videoconferencing, all of that For those 60 percent of small businesses that are not networked yet, this opens a tremendous opportunity for VARs to go sell them on getting a network. And the other 40 percent probably have an Ethernet networking running at 100 Mbps or they have some complementary Wi-Fi running at 54Mbps. Now you can go back and say 'I'm going to upgrade your entire network to 300Mbps, all wireless.'

NEXT: Lo's plans for Netgear's partner strategy

CRN: What's the status of your channel strategy and partner program right now? You did have a shift in leadership about a year ago, with the departure of Doug Thiele, director of channels.

Lo: Yes. Right now the VAR channel programs are headed up by Mike Stetter, our director of channels.

CRN: What's been the impact of that change? What differences are partners seeing since the management shift?

Lo: Partners are seeing that we are richer in terms of activities that are put in front of them. We have more Webinars, more contact with them on the phone on a weekly basis, we have more training scheduled, and we have more e-mail alerts on new product introductions. That's what they're seeing. From our standpoint, of course, we're seeing growth in channels revenue. We've been growing in the upper double digits on a year-on-year basis.

CRN: Are there any changes to the channel program scheduled for the coming year?

Lo: What we've been doing with the channel program is more and more of what we call co-marketing and co-selling with complementary technology partners. A good example is that we've been co-selling and co-marketing with some VoIP vendors. The most prominent would be ShoreTel, so when they sell they're VoIP PBX and phones, we sell our Power over Ethernet switches. We've been co-marketing and co-selling with Trend Micro, so when they sell they're UTM software, then we sell our firewall. We're doing more of those.

CRN: Is that actually bringing ShoreTel partners and Trend Micro partners into the Netgear fold that weren't there before?

Lo: And vice versa.

CRN: What's the technology that you're really banking on going forward?

Lo: We still believe that our strength is in switching, and that's where we believe we'll continue to excel. But we also understand that customers sometimes prefer a one-vendor solution, and that's why we offer wireless as well as security devices. We're not in the VoIP area, we'd rather partner. Today we partner with ShoreTel but we're in discussion with other VoIP parties.

CRN: What's the timeframe for when those partnerships will be ready?

Lo: We'll continue to forge along, announcing partnerships throughout the course of the year. VoIP is just one possibility. There are many other possibilities such as mesh wireless networks, public surveillance, all types of technology we will partner with other people on.

CRN: What's the implication when you have an event to showcase your wireless wares and talk about how so many small business will be able to go wireless but then talk about your strength in wired switching?

Lo: For the consumer side on a worldwide basis, we are a close No. 2 on wireless so on the consumer side we are known for wireless. Tonight's event will help us springboard that hopefully into the small business world as well. On the small business side we are known as No. 1 in switching already, so what we'd like to do with tonight's event is spring us into the small business world as No. 1 in wireless as well. If we are successful in that, our partners will benefit, and of course we will benefit as well.

NEXT: Lo aims to take on 3Com and HP

CRN: As you stand at Netgear's 10-year anniversary, what are your goals going forward?

Lo: Looking at the next 10 years, our goal is to really expand our partner base, both in terms of the type of partners and the number of partners so that we can sell into bigger businesses and compete more directly with 3Com and Hewlett-Packard.

CRN: Are you looking for different expertise than the bulk of your partners have today?

Lo: The expertise is more into understanding the bigger customers' needs, their service requirements that's what we're looking for.

CRN: How would you define those bigger customers by size?

Lo: Typically the customers we're looking at are between 100 and 250 nodes, so that's where we want to expand the partner base into.

CRN: Where are the bulk of your partners focused today?

Lo: They're mostly focused within 25 to 100.

CRN: So who is your biggest competitor today?

Lo: It varies from geography to geography, and it varies from product to product. I would say in the United States, if you look at wireless, there's no doubt our No. 1 competitor is Linksys. If you look at unmanaged switches and smart switches, our No. 1 competitor is Linksys. But if you look at managed switches, our No. 1 competitors would be 3Com and HP.

CRN: Is there a product roadmap to support the managed switch side as you try to compete more with 3Com and HP?

Lo: Yes, definitely. [At Interop] we introduced a stackable smart switch that can support up to 192 users and we also introduced a stackable Gigabit [Ethernet] switch that would support at least 250 users, and we also introduced an SSL-VPN appliance, so all of these are helping us go into these bigger installations.