Networking Vendors Counting on Channel for SMB Push

Top executives from D-Link Systems and Netgear are spearheading reinvigorated channel efforts in their chase for SMB market share.

In recent interviews with CRN, D-Link Systems President and CEO Steven Joe and Netgear Chairman and CEO Patrick Lo both said their companies are trying to bolster their standing in the SMB market with the help of solution providers.

As the two vendors pump up their commitments to channel partners, they are waging what the executives called a battle of perception, fighting to convince solution providers and customers that they have more to offer than the consumer/SOHO products they are best known for, mainly a broad lineup of full-featured SMB gear that is both economically priced for end users and profitable for partners.

These vendors' ties to the consumer world are exactly what keep some customers from seeing them as serious contenders in the business market, solution providers said.

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"As you move higher up the product line in sales to larger corporations, the association D-Link has with consumer products tends to work against them from a marketing standpoint," said Jeffrey Goldberg, president of Washington Computer Services, a solution provider in Brooklyn that works with D-Link Systems and, to a lesser extent, Netgear.

Some solution providers said they share the same bias.

"We use D-Link for extremely small businesses, five users, but if it gets to 10 users, 20 users, 30 users, we start to standardize on Cisco," said Tracy Butler, president of Acropolis Technology Group, Wood River, Ill. "We know it works, and there's very little risk in doing that."

Several solution providers said they'd like to see the vendor preserve the D-Link name for its consumer/SOHO gear and rebrand its SMB products under a new name. D-Link said it plans to continue using the D-Link company name for all of its products and its xStack product brand for its SMB equipment.

Executives from both D-Link Systems and Netgear said channel partners are key to winning both mindshare and market share in a space that continues to entice vendors from both ends of the spectrum. While consumer/SOHO vendors such as D-Link Systems, Netgear and Cisco's Linksys division seek to establish themselves upstream, enterprise veterans like Cisco and Nortel Networks continue to push downward, where they all bump up against perennial SMB players like 3Com, Hewlett-Packard's ProCurve networking division and SMC Networks.

D-Link Systems, the North American arm of Taiwan-based D-Link, is launching a massive recruitment effort to add 500 to 750 "highly qualified" SMB VARs to its channel program, which currently includes about 2,500 partners, Joe said. An additional 7,500 partners actively sell D-Link Systems products, he said.

"Even though we're known in the consumer realm, we think the business category is something we have a lot of strength in," Joe said. D-Link is known overseas for its higher-end products but has started from the ground up as a consumer player in U.S, he said.

Next: More on the vendors' partner recruitment efforts

.About 40 percent of D-Link Systems' sales come from business products, with the remaining 60 percent from the consumer side. Joe said he sees a shift in the near future that would result in a 50/50 split between the two.

D-Link's partner recruitment effort is being led by the vendor's recently revamped channel team -- unveiled this month -- which now includes Van Andrews, vice president of channel sales and Paul McCauley, associate vice president of distribution sales. Both executives report to Executive Vice President Keith Karlsen.

In the past, D-Link Systems hasn't pushed hard enough in the SMB market, which it identifies as businesses with 10 to 400 employees, Karlsen said.

"We haven't focused on this space as much as we could have," Karlsen said. But with new product launches and increased channel efforts, sales of the vendor's business products are up 70 percent year over year, he said. It's an initiative that brings D-Link Systems up against a new set of competitors, including Cisco, 3Com, Enterasys Networks and HP, he said.

To build on its momentum, the vendor now seeks partners with high-end integration skills, executives said.

"We want somebody that can service the product and take care of the end user," Andrews said. "We don't go direct. Everything goes through the channel, but we have to make sure the end user is happy."

To help its partners provide top-quality customer service, D-Link has put six sales engineers in the field in the U.S., up from two a year ago, Karlsen said. A new aggressive storage program is also on top to debut in about a month, and the vendor continues to grandfather solution providers into the top level of its program that currently partner with rivals such as 3Com, he said.

Gary Stern, chairman of solution provider PC Universe, Boca Raton, Fla., said D-Link is taking the right steps. "They've decided to spend the money to play the game."

For its part, Netgear also seeks to challenge higher-end competitors in customers with between 100 and 250 nodes, compared to the 25 to 100 user customers its solution providers focus on now, Lo said.

"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," Lo said.

Over the past year, since bringing on new channel director Mike Stetter, Netgear has bulked up its communications with partners, putting on more Webinars, increasing phone contact with the channel and offering more training, Lo said.

Stetter said improved support is also on the way from Netgear.

"The biggest difference partners will see this year I would say is that support is going to be No. 1, both from the sales and technical side. I think we have decent support today, but we're not going to rest on our laurels," Stetter said.