UPDATED 23:54 EDT / JUNE 01 2020

INFRA

Networking giant Cisco goes small to get bigger

Even though Cisco Systems Inc. has just postponed its Cisco Live digital event scheduled for this week, something that the networking giant announced last week could prove to be among the most interesting things it’s planning in coming months: a renewed focus on small businesses.

It’s fair to say that no company has dominated networking and communications more than Cisco over the past three decades. The company has held a dominant share position in most of the markets in which it plays, including routing, switching, collaboration and more. Products such as Catalyst switches and the Integrated Services Routers have such high share, they’re almost considered industry standards.

However, one market segment it has never cracked the code on is small businesses. In fairness to Cisco, no other provider has either, since it’s the most fragmented part of the market.

Small business could move the needle

One of the more interesting aspects of the small business segments is that the total addressable market is massive. In a briefing with analysts, Dhritiman Dasgupta, vice president of marketing for Small Business Solutions, sized the overall information technology spend from small businesses at about $42 billion globally, with Cisco’s opportunity about $3 billion. I’ve never sized the market myself but that seems to be about right.  My research has found that the under-500 employee segment accounts for about 30% of overall networking and communications spend, so the number Dasgupta provided seems about right.

Cisco has had its eye on this market for years but has never managed to get more than single-digit share. The main issue is that it never had quite the right product. Its first approach to that market was to take Linksys and build a set of business products. That had some appeal to the very small companies with fewer than 50 employees, but those products never scaled to the larger end of small. 

Making the enterprise grade

It also tried selling smaller versions of its traditional products, but those products proved to be too complicated and too expensive for companies of that size. Cisco does midsized and large organizations better than every other networking provider, but those companies have dedicated network professionals that are certified and can get trained to excel in the use of Cisco products. Small businesses have IT people that are more “jacks of all trades” and they need to run not only the network but also the servers, desktops, mobile devices, software and anything else you can think of. Simplicity is critically important.

Price is another factor. Taking an expensive Cisco product and making it a bit less expensive might mean it’s cheaper than other Cisco products but it’s likely more expensive than competitive products. It’s a like a low-end Porsche starts at about $50,000, which is cheap for that class of car but it’s way over the budget of most people. Small businesses aren’t publicly traded, so every dollar spent comes out of the pockets of owners and asking them to spend two to three times as much for a Cisco product with the justification of “because it’s Cisco” doesn’t really fly.

Tailor-made for small businesses

But with its latest set of announcements, Cisco has taken care of many of the issues that has held it back from making a bigger dent with small businesses. Below are highlights of the product announcements:

  • Cisco Business Dashboard. This is an upgrade of the current network management tool that provides the IT person a “single pane of glass” for all their Cisco equipment.  The tool lets the IT individual manage the entire lifecycle including configuration, alerting, change management and operations.  This greatly simplifies operations as it obviates the need for the need to work with Cisco’s command line interface (CLI).
  • New switches. Cisco announced two new series of switches to its Business portfolio. The 250 comes in 8/16/32/64 Gig-E port options with 1-Gig or 10-Gig fibre uplinks. The product supports PoE+ and has integrate DoS protection and time-based ACLs. The 350 series is similar but is beefed up with additional security features such as sFlow and advanced threat protection. It also has CLI support for those that want it and it’s stackable. The surprising part of these switches is the price point, which starts at under $200. This is the first Cisco-branded switch ever sold at that price point and is targeted right at the Ubiquiti buyer. Given Cisco is generally known to deliver high-quality products and Ubiquiti is not, I would expect this to get a lot of looks from small businesses.
  • Email security. The new Cisco Mailbox Defense is a cloud-based email security product for Office365. E-mail has been and continues to be the number one threat vector and COVID-19 has taken it to another level with massive amounts of pandemic related phishing. Email security should be a no-brainer for small businesses, but many don’t run it because some solutions are complicated to get up and going. This one requires only changing the MX record and can be set up in minutes.
  • Webex Work. Many small businesses shy away from tools such as Webex, Teams and Zoom because of the price, which is typically in the $30 per month per user range, give or take a few bucks. Webex work is a full-stack collaboration tool that includes calling, meetings and messaging for $19.95 a month.   
  • Network analytics tools. Customers on the larger end of small businesses will likely use Meraki, which has added Health and Insight tools to the Meraki Dashboard. I’ve seen demos of both Health and Insight and they are loaded with analytic information to make it easier to isolate the source of problems that impair application performance.

The new products will certainly help Cisco grow its share in small businesses, particularly Webex Work and the new switches. Cisco is widely deployed across medium and large enterprises, but the higher price points and complexity of products has always caused small business buyers to look elsewhere. 

Perception problem

I also think Cisco has a perception problem with small buyers. I’ve interviewed many IT professionals in that segment and many have great respect for Cisco and feel the company offers best-in-class products but the advanced feature set makes it overkill for the needs of a small company. In theory, if a customer can get a product loaded with features at the same price point as one that isn’t, why not buy itBut theory sometimes does not translate to reality, since the advanced features can intimidate a buyer.

I also think the branding mix of Meraki and Business networking products can be confusing. Although they both fall under the “Designed” portfolio, they are different product families with different feature sets. I asked Cisco about this and the Business products like the 250/350 series that are for the very small, while Meraki is for the larger end of small with more technical IT people, but that line can be confusing. Part of the sales and marketing efforts for Cisco needs to be making it crystal clear where each product fits and how a business might upgrade from Business to Meraki to its traditional Catalyst products as they grow.

The updates to the Designed suite of products round out the existing portfolio and give Cisco a wide range of price-competitive products to grow its share small businesses. In many ways, for Cisco building the products is the easy part. Now the hard work of building a sales challenge and creating the right marketing to this audience to change the perception of complexity begins.

Zeus Kerravala is a principal analyst at ZK Research, a division of Kerravala Consulting. He wrote this article for SiliconANGLE.

Photo: dizzydj311/Pixabay

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