One message that came through loud and clear at Cisco’s Partner Summit in Vancouver earlier this month is that Cisco executives want to improve the company’s market share in the small to medium business market.
The company rolled out a variety of programs and tools designed to encourage its reseller partners to drive sales to SMBs. While it’s encouraging to see Cisco releasing management and support services targeted at non-techies, it’s still not clear that Cisco understands the importance of price when it comes to winning SMB business.
It’s simple to see why Cisco is taking an interest in the SMB market.
While Cisco dominates the enterprise, SMB is another story. Cisco has around 77 per cent market share in Canadian enterprises, but it only has about 23 per cent share in the Canadian SMB market, according to Steve Simmons, vice-president of channel operations for Cisco Canada. Twenty-three per cent isn’t as bad as it sounds, since there are more players in the SMB market than in the enterprise, but it’s still a far cry from Cisco’s dominant position in larger accounts.
When Cisco first announced it was focusing on the SMB space last year, the company thought it could use the same SMARTnet services it sells to enterprises. SMARTnet, however, proved to be too technical for SMBs, who have little to no in-house IT expertise. So this month Cisco launched SMB Support Assistant services, which are designed for non-technical people. Executives said Support Assistant is only the first in a series of tools that will target the SMB. Cisco also introduced a new version of Network Assistant, 2.0, a basic Windows-based management application.
These initiatives will make Cisco gear easier to use, but they don’t fix one fundamental problem Cisco has in the SMB market. SMBs are more price-sensitive than enterprises and Cisco products (other than the company’s unmanaged Linksys gear), can cost about 40 per cent more than hardware from firms like Hewlett-Packard and 3Com.
If Cisco wants to keep its hefty margins and compete in the SMB market, the best hope is probably coming up with some kind of integrated solution that would save an SMB enough money to justify the higher cost of the Cisco equipment.
Cisco does have a program that rewards resellers for coming up with innovtive solutions for customers. But it probably translates better in the enterprise market where there’s more complex technology and more complicated processes to iron out than there are in the SMB space.
There’s little doubt left that Cisco is committed to increasing its presence in the SMB market. Simpler to use technology, like Support Assistant, will certainly help achieve that goal. But without more competitive pricing, it’s still tough to imagine Cisco dominating the SMB market, like it does the enterprise.