Cisco Takes A Small-Company Focus

Vendor courts small and midsize buyers with simpler interfaces and all-in-one boxes
Cisco Systems, the leading networking vendor for large enterprises and communication service providers, is focusing more on products for small and midsize businesses and the branch offices of its enterprise customers.

Cisco expects small and midsize businesses to recover faster than large ones, and the vendor wants to be considered when they start buying again. "Six months ago, Cisco wouldn't even be in the picture," says one IT executive at a midsize company, who asked to remain anonymous to protect current negotiations with the vendor. "Their prices were too high, and they didn't have the right products. Now they're a major contender."

The vendor is retooling its enterprise technology with easier-to-use interfaces aimed at customers that don't have large IT staffs. It's creating more low-cost, all-in-one boxes that can include a variety of capabilities, including routing, switching, security, voice applications, storage, and wireless. The goal is to give smaller businesses and branch offices the features and functionality once reserved for the headquarters of big-spending customers.

For example, Cisco last month started offering its caching code on a blade for branch-office routers, eliminating the need to buy its Content Network Switch for caching. In the future, the company plans to convert voice, storage, and wireless technologies into intelligent blades that fit into branch routers.

Mike Volpi, Cisco's senior VP of routing technologies

Small and midsize businesses want one piece of equipment to do many things, Cisco senior VP Volpi says.
"Increasingly, small and midsize businesses don't want 10 boxes. They want one that can do many things," says Mike Volpi, Cisco's senior VP of routing technologies. Cisco says it will add value to switches and routers so they can be used for a number of applications.

Cisco this week plans to unveil a voice blade that will let customers plug IP phones into a router and get full-service IP telephony without having to buy an IP PBX. "We're taking basic routers and switches and making them the equivalent of a small PBX system," Volpi says.

Cisco gets about one fifth of its revenue from customers with fewer than 1,000 connections, and it devotes about one fifth of its $3.8 billion research and development budget to products for that market. Cisco executives estimate that the company has grown its share of this networking market by 3% to 5% a year over the past five years and that it now has 40% of that market.

One of those customers is clothing retailer Ann Taylor Stores Corp., which is using Cisco's 1710 branch-office routers to roll out an IP VPN to 600 locations. The network replaces dial-up lines and provides DSL access to the Internet and dedicated access to a frame relay network at a cost to each store of $180 or less a month. It also cuts the time it takes to roll out software from months to weeks and, with a new Web-based application now in testing, provides in-store personnel with sales figures, staffing details and advice, and buying patterns. "It's already driving sales tremendously," says Tom Pane, Ann Taylor's VP of technology. "It helps the store understand the customer and what she wants."