Family ties: Cisco pulls Linksys small business channel into the fold

Cisco is making moves into the SMB market by integrating the Linksys small business channel into its own; partners are on board but cautious.

Cisco Systems said Monday that it will integrate the Linksys small business channel partner group into its mainstream channel program.

Linksys' business products and its engineering team will also be incorporated into Cisco's small and medium-sized business (SMB) team, offering a wider portfolio for channels from both companies. Cisco acquired Linksys, a maker of popular consumer and small business networking products, in 2003.

Linksys small business channel partners are mostly thrilled by the ability to sell the Cisco name and a wider range of products, but they are watching the new setup to make sure their business models and pricing aren't undermined.

"This is something they should have done a long time ago," said Roger Otterson, president of Linksys partner Qualitec in San Diego. "It's important that we as partners emphasize to Cisco [the need] to keep 'small business' as a unique label that doesn't allow enterprise providers to come down into the small business space."

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Integrating the two channels and portfolios is part of Cisco's plan to push deeper into the SMB market. Earlier this year, CEO John Chambers said the company would seek tens of thousands of new SMB customers, and now the company has added an organizational initiative.

"We run our business based on councils: one for enterprise, one for service provider, one for commercial, and now one for SMB," said Andrew Sage, Cisco vice president of small business sales in worldwide channels. "We are establishing a new level of leadership in terms of SMB."

Cisco's SMB product line includes routing, switching, mobility, voice, network-attached storage (NAS), physical security and video products. The Linksys brand will remain applicable to consumer products.

Linksys small business channel partners welcome the change -- they say being lumped in with consumer products hurts their businesses.

"Now we can really separate ourselves from the home products line, and we can leverage the Cisco name," said Austin G. Smith, CEO of Atlanta-based Linksys partner DigitalSon I.T. Services. "A lot of people think of Linksys as the [wireless router] they have at home."

Linksys business products are marketed under the name Linksys by Cisco. It hasn't been determined yet if Cisco's SMB products will all take on the Linksys by Cisco brand or just be labeled Cisco. For now, Sage said, both brands have name recognition, so the company will have to see how it goes.

More than 20,000 Linksys small business channel partners worldwide will be eligible to join Cisco's 40,000-member channel program, but a significant chunk of the Linksys small business channel is already cross-certified, Sage said.

Though Cisco's large channel dominates the Linksys small business channel, there is little concern of conflict as the two merge.

"For partners focused on small business, there is tremendous opportunity for all to gain market share," Sage said, adding that "over-distribution" is not Cisco's style.

Sage said there isn't much overlap between partners serving large enterprises and those in the SMB space. Large systems integrators are likely to use Linksys technology -- such as NAS -- to add onto more complex packages.

On the flip side, moving Linksys small business channel partners to Cisco could eliminate conflict within the Linksys channel.

"You have these partners that are putting home-class stuff into businesses," Smith said. "I have been beat out by a home product." Now partners that want to sell into small businesses will have to sign up and sell the appropriate products, he said.

While the positive aspects of this deal are clear, partners are not getting into this with blind hope. Some want to be assured that the Cisco channel organization will value its small business partners the way that Linksys did.

"If you're committed to the small business space, it's a different skill set, because you are not dealing with an IT staff. You have … to understand their business needs and not just sell a piece of technology," Qualitec's Otterson said.

Partners that sell to small businesses also tend to have lower product sale numbers, though they sell lots of services, Otterson said. Because of that, Cisco can't reward SMB partners with the same kind of sales metrics as regular partners.

"When I sell five of a particular phone system in a year, that's a good year for us," he said.

Otterson also said that he hopes selling fewer products or having fewer certifications won't mean receiving less support from Cisco.

"Linksys has been really good about supporting its products. With Cisco you have to have a bunch of letters after your name to get support," Otterson said.

The most resounding concern among partners is money.

"What I am hoping is that they will keep the prices where they need to be and not just charge that extra price on the brand," Smith said.

Still, Otterson and Smith both said Cisco has expressed nothing but support so far, and they believe the company is planning to build a solid and fair SMB practice.

"They seem really committed," Otterson said.

Linksys small business channel partners have until Sept. 16 to register as Cisco partners, at which time they will have access to the same financial incentives, demo equipment, and sales and marketing support as the rest of Cisco's partners.

"Linksys partners are going to get an email and then a phone call in the next week or two to simply walk them through a process that should take 20 minutes," Sage said.

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