Cisco Expects Big Things From Small Businesses

By Colin C. Haley

April 23, 2004

The network equipment leader launches a multi-pronged initiative to woo small and medium businesses.

Cisco today stepped up efforts to woo small and medium business (SMB) customers with a new multi-pronged initiative.

Dubbed SMB Class Solutions, the push includes enhanced networking hardware, software and services designed for flexibility and scalability.

Taking a page from telecom carriers' playbook, Cisco is bundling telephony and voice mail, enhanced routing, switching, security and Virtual Private Network products with wireless connectivity at reduced prices.

The San Jose, Calif., company also improved its applications. New communications programs allow SMB customers to activate intelligent telephony features such as click-to-dial and on-screen notices of incoming calls.

A series of improvements to network manager programs aims to make it easier to set-up, secure and manage components using new intuitive menus.

"We have been building to this," Peter Alexander, vice president of commercial products, told internetnews.com. "We've increasingly seen growth and success in the small and medium business space."

Cisco doesn't formally report the percentage of SMB sales compared to enterprises and service providers, but Alexander said roughly 25 percent of its product revenue comes from deals with companies with between 20 and 1,000 users.

There are other non-technical aspects to the plan, such as financing. There's a new one-page credit application and quick funding decisions. A zero percent, 36-month leasing option and service-only financing starting at $5,000 per year for three years are also now available.

Finally, training is part of the mix. The SMB Class Solution designer tool educates users on networking and helps them design customized networks and online classes are available.

In all, Cisco, which competes against Juniper and Nortel , among others, has earmarked about $2 billion over the next two years to support SMB Class Solutions.

During the telecom downturn, President and CEO John Chambers often said he believed SMBs would lead the way to recovery because of their networking needs and ability to act quickly. Today's announcement puts additional resources behind that prediction.

Industry watchers believe SMBs are becoming more reliant on networked applications, including online interactions and communicating with their mobile workforce.

"For long-term survival, SMBs must be able to adjust quickly to unpredictable market conditions," Helen Chan, senior analyst, Yankee Group, said in a statement. "They look for flexible and scalable technology solutions that meet their business requirements today and future-proof their business needs tomorrow."



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