April 23, 2004, 4:03 PM — Cisco Systems Inc., the undisputed king of the enterprise networking market, is setting its sights on a smaller fry with the launch of an SMB initiative this week.
Cisco's SMB effort will include all-in-one product bundles, simplified setup applications, financing, training and a US$2 billion commitment to the SMB market.
"This is to some degree a repeat of the Cisco story in the enterprise, but delivered in an SMB size and scale of complexity," said Peter Alexander, vice-president of worldwide commercial marketing for Cisco.
Targeting the SMB market makes sense for Cisco, said Dan McLean, an analyst with IDC Canada Ltd. in Toronto.
"It's the one segment of the market they don't already own," he noted. "They've got their fingers everywhere else."
Cisco's largest hurdle in penetrating the SMB market is the complexity of its products, McLean said.
"I've heard companies say they'd love to use Cisco, but that it's too complicated," he said. "There's a big chunk of the market that wants to just plug a networking product in and have all the configuration done and the features ready to go."
Cisco recognizes the need to make its products simpler to use for smaller business that don't have a lot of highly trained in-house IT talent, Alexander said.
An Express Setup application is designed to allow small outfits to get their network gear up and running quickly, while another application called SmartPorts will help customers turn on features such as virtual LANs and quality of service, Alexander noted.
Cisco will complement the applications with online training. The company is also planning to launch programs that will let SMBs train their IT personnel in the basics of managing Cisco networking gear.
Another challenge Cisco will face in the SMB market is that the company doesn't have a lot of gear suitable for SMBs, McLean said.
"There's a bit of a gap, I think, in Cisco's product portfolio where the Linksys stuff probably isn't rich enough and on the other side I don't think Cisco has the price/competitiveness or the simplicity of function for the market," McLean explained. "Cisco needs to do some work there to bridge that gap."
Cisco knows it's going to have to work to be a success in the SMB market. Some of that work will involve integrating multiple Cisco technologies into a single box suitable for an SMB, Alexander said. On the pricing front, Cisco has tailored financing plans to SMBs, offering them perks such as 36-month, zero percent interest leases.
After years of concentrating its efforts on the enterprise market, Cisco is targeting SMBs, because SMB technology use is growing, Alexander said.