Cisco Goes Downmarket

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Yesterday, Netgear went upmarket. Cisco answered with a batch of new products aimed at small and medium businesses, meaning they went downmarket. But rather than use the Linksys name they bought a few years ago, they labeled their new boxes with the Cisco name. Can they dominate the small business market like they have the enterprise?

Yes, but. I think they can become the dominant player if they really want to. Why? Two reasons. First, they can lower prices to any level to match anything Netgear and the other vendors in the small and medium business market offer. Or they can drop their prices below the market and squeeze the profits from their competitors. Say hello to one big advantage of deep pockets.

Second, many of the products for small businesses are purchased for branches of large businesses. Who make most of those decisions? IT people at the main office. What are they most familiar with? Cisco.

Will Cisco dominate this market? The answer depends on how serious they are, how well their resellers can go downmarket, and how many Cisco vice presidents mess things up.

This first batch of products includes the Cisco Spam and Virus Blocker, NSS2000 and NSS3000 Network Storage Systems, and the Cisco Smart Business Communications System Release 1.4. The spam and virus blocker pricing ranges from $2599 to $5399 depending on capacity (up to 250 users) and software subscription length. Those prices aren't squeezing any of their competitors. The Network Attached Storage (NAS) devices start at $595, which again seem high in a market where you can get multiple terabytes for under a grand. The release doesn't give pricing for the communications system, because it's complicated. That's not a good sign for small businesses.

Could Cisco be the dominant player in three years in this space? Yes. Will they? Not with the types of products and pricing they released yesterday. It appears that this downmarket flurry is just another big company paying attention to us small guys when the enterprises slow their purchases. That attitude won't win the market for them, it will just keep a few idiot vice presidents busy a few quarters until the enterprise market picks up again.

Should Cisco be the dominant network infrastructure player for small businesses? Not according to people like Netgear and the dozens of others who have been serving the small business space for years. Guess we'll wait and see how serious Cisco is about small business this time around.

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