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Small is getting smaller in the small business Wi-Fi market.
Networking vendors this month have been launching products to go after customers in the most diminutive side of the small and medium-sized (SMB) business market: organizations with fewer than 100 users. Vendors contend that segment of the SMB space is underserved: Enterprise-class Wi-Fi offerings are too complex and expensive, while consumer-grade solutions that fit the small company budget aren't sufficiently business oriented. The trick for vendors is to find ways to deliver Wi-Fi offerings that address the small business customer base wish list for cost and capability. Vendors, meanwhile, are cultivating ties to channel partners to help market their Wi-Fi offerings to small business customers.
In recent weeks, Cisco Meraki, Linksys and Adtran Inc. have all rolled out channel-oriented products targeting smaller businesses -- the most populous segment of the SMB market.
Ken Fernandes, manager of Wi-Fi technology and strategy at Adtran, said out of the 5.8 million SMBs in the U.S., 4.6 million are micro businesses with 10 or fewer employees and small businesses with 100 or fewer employees. The "M" in SMB -- businesses with 100 to 500 employees -- adds up to 89,000 firms, or about 1.5% of the SMB market.
"As you can see there is a concentration in the micro and small businesses and this market is largely untapped at this point," Fernandes said, citing U.S. Census Bureau data.
In search of channel margins
Adtran, a Huntsville, Ala., company, in September launched a Wi-Fi offering for service providers. The cloud-managed product aims to let service providers simplify management and reduce install time to tap the micro and small business sector.
Fernandes said the new offering provides a channel partner margin opportunity other products don't.
"Current cloud-managed Wi-Fi solutions on the market are already too expensive for this cost-conscious micro and small business market -- never mind stacking a service provider margin on top," he said. "This essentially leaves little to no margin for the service provider."
Adtran's bundled Wi-Fi and internet solution doesn't require a subscription for the cloud service. That approach gives service providers a product at a price smaller businesses can afford, while providing higher margins, Fernandes said.
Linksys, also in September, took the wraps off its cloud-based Wi-Fi management platform for the small business market. Linksys Cloud Manager is preinstalled on certain Linksys access points at no extra cost. The lack of a subscription fee lets Linksys partners make more money when they charge customers to remotely manage their Linksys access points, according to the company. As with Adtran, the lack of cloud management overhead creates an opportunity to boost margins.
Linksys, based in Los Angeles, plans to acquaint its current cadre of resellers with its cloud-managed Wi-Fi offering, while recruiting new channel partners.
Ken Fernandesmanager of Wi-Fi technology and strategy, Adtran
"We have an existing base of authorized resellers in our current Partner Advantage program," said Wayne Newton, director of commercial business at Linksys. "Many of those partners will have access to the Linksys Cloud Manager offerings, and we will be aggressively pursuing new resellers and managed service providers who sell products and solutions like ours into the SMB market."
Linksys' cloud-equipped access points are geared toward organizations with 150 or fewer users. Linksys said its entry-level access point supports up to 60 connected clients, while its higher-end model, which will be bundled with Linksys Cloud Manager in November 2018, supports up to 150 clients. A spokeswoman for Linksys said those numbers reflect the recommended load for its access points. She said each access point can theoretically handle up to 500 clients.
Cisco, the market share leader in IDC's analysis of the enterprise wireless LAN space, is also moving down-market. Cisco Meraki's Meraki Go, announced in September, aims to give channel partners an opening into previously out-of-reach small business markets. Specifically, the product targets small businesses with fewer than 50 employees.
"This is a brand new offer for a new customer segment," said Kevin Rezai, Meraki Go global sales lead at Cisco Meraki.
The Meraki Go package includes indoor and outdoor wireless access points, a Meraki Go app for managing the wireless network and a subscription for support and security updates.
Execs: Cisco validates small business Wi-Fi market
Cisco's arrival in the sub-50-user segment of the small business Wi-Fi market doesn't seem to be unsettling other players in this wireless arena.
"The Meraki Go announcement just strengthens and validates our position that there is a large opportunity to drive value and simplicity into the SMB space," Newton said.
John Tippett, vice president of Datto Networking, which sells Wi-Fi access points and cloud-managed switch offerings via MSPs, holds a similar view on Meraki Go. Datto Inc., a backup and MSP automation provider based in Norwalk, Conn., entered the networking business in early 2017, following its acquisition of Open Mesh. The company sells exclusively through channel partners.
"Moves by Meraki and other vendors validate the needs of the SMB market -- high performance products at more affordable price points," he said.
Datto Networking's pricing model consists of a one-time, low-cost hardware fee and a low-cost monthly per-device service fee, Tippett explained. He said there is no contract or committed term of service associated with the company's pricing approach. In addition, the monthly service fee per device decreases as a channel partner deploys more Datto Networking switches and access points across their customers. That's because the monthly service fees are based on the partner and its fleet, rather than an individual customer, Tippett added.
The monthly service fee includes cloud status, cloud management, 24/7/365 Direct-to-Tech support, firmware updates and a lifetime warranty on Datto access points, switches and managed power devices.
At Ruckus Networks, a vendor based in Sunnyvale, Calif., Meraki's arrival isn't altering the company's market positioning. Mark Davis, senior director of product and segment marketing at Ruckus Networks, said other vendors' product announcements don't change the nature of the company's value proposition. Ruckus sells primarily through the channel, for the most part via two-tier distribution.
"The small and medium business segment -- which we address with products like Ruckus Cloud Wi-Fi and Ruckus Unleashed -- is showing robust growth," Davis said.
Ruckus Cloud Wi-Fi, for example, consists of an access point and a management subscription, which is sold on a per-access-point basis. Both elements are sold through channel partners, who Davis said may choose to bundle the components as part of their own as-a-service offer.
Davis cited "rising end-user expectations" as the most significant trenddriving the small business Wi-Fi market.
"Any consumer-facing organization risks losing business if their guests and customers can't use their devices in the way they've become accustomed to using them," he said.