New Products Bring Advanced IP Networking to Smaller Businesses

September 28, 2004

Earlier this year, Cisco Systems CEO John Chambers made a public commitment to create advanced networking technology that is more accessible to smaller businesses. This month Cisco took the next step in making good on that promise with the announcement of a suite of custom-tailored switching products for small and medium-sized businesses (SMBs). The SMB-Class hardware and software--based on Cisco's sophisticated modular Catalyst switching products-are more affordable and easier to manage than traditional corporate networking equipment, helping bring the benefits of high-performance, converged IP communications to a wider range of organizations.

News@Cisco spoke with Cisco's Peter Alexander, vice president of Worldwide Commercial Marketing, and John McCool, vice president and general manager of the Gigabit Switching business unit, about the recently announced SMB-Class switching products and how their customized capabilities will make it easier for smaller businesses with limited IT budgets and resources to tap into the power of advanced IP networking.

What are the new SMB-Class switching products Cisco is announcing?

John McCool: Overall, we've designed the new products to bring the advantages of modular switching architecture to smaller businesses. Modular switches let customers mix and match components for more flexible feature support as well as greater scalability. And as technologies evolve, customers can swap out older components with newer ones, helping businesses get more out of their initial networking investments. Until now, most modular switches and their components were designed with larger corporations and organizations in mind. The SMB-Class products we are now rolling out have been created specifically for smaller companies. They focus on characteristics most important to these companies: ease of use, increased network security, flexibility and scalability for growth. An example of this is a series of modules and line cards we created for our entry-level modular switch, the Cisco Catalyst 4503. One of our featured modules is the Supervisor II-Plus-TS, which gives smaller businesses the flexibility to use 10/100/1000 gigabit per second (Gbps) connections to servers, desktop computers, wireless devices or IP phones, with the added capability of using power-over-Ethernet to power wireless access points and phones. We've also created new line cards with half as many ports as existing line cards so smaller businesses are not paying for capacity they don't need. But these cards still offer advanced capabilities, such as the ability to connect to a fiber optic line, so smaller companies can expand their networks and take advantage of advanced technologies as their needs dictate. We are also announcing the Cisco Catalyst 4948, which shares many of the same characteristics of our existing 4500 Series but has been sized to a one rack-unit size. The idea behind this product is to offer a high-performance switch to customers who have space concerns.

In conjunction with the new SMB-Class hardware, we have developed an all-new, entry-level network management application that provides centralized control, automates configuration, and simplifies troubleshooting through a graphical user interface. This system which eliminates many of the manual programming tasks required of typical switches. It works with the new SMB-Class switches, as well as our existing lines of stackable Catalyst switches and routers, such as our 3750 Series. Best of all, the Network Assistant is free to all Cisco customers. It's designed to ease the "out of the box" experience for customers who don't have specialized staff for such tasks. We like to think of it as a software version of a networking expert.

How are these products different than other Cisco networking products?

Peter Alexander: These new products address the specific needs of smaller businesses. Unlike larger Fortune 1000 companies that focus on such networking equipment characteristics as performance and scalability, SMBs have a greater need for smaller scale products-a design variable we refer to as "form factor." It's like a carpenter who only needs a reliable pickup truck for hauling wood verses a general contractor who needs a semi-truck for moving steel beams. They both need trucks but the two types are worlds apart. Along with this idea, cost is certainly an issue. Smaller businesses generally have more limited IT budgets and must make every penny count. So this has lead us to what we call "right sizing" our products so they offer the appropriate amount of performance, capacity and features for SMBs. Also, these products address the issues of complexity. SMBs, unlike large corporations, typically don't have as great a depth or breadth of IT employees and resources to manage their networks, so simplicity and ease of management in their equipment is crucial.

What will SMBs be able to do with these products that they weren't able to do before?

Peter Alexander: These new products, as well as other products we are developing for the SMB market, make it far easier and more affordable for smaller companies with limited IT resources and budgets to take advantage of what we broadly term as "intelligent networking technologies." These are technologies larger corporations are now using to improve productivity and reduce costs. Such technologies include wireless, IP telephony, quality-of-service, advanced security, and virtual private networks. These technologies help companies exchange information more easily and effectively within an office, among far-flung employees, and with worldwide partners--in the processes expediting supply-chain management, improving customer service, and facilitating use of back-office applications, such as financial or human resource software.

John McCool: Smaller companies are now finding as much, if not more value, from what was just a short time ago considered cutting-edge technology only affordable to deep-pocketed Fortune 1000 companies. Certainly, security is now every company's concern. They can get hit by a hacker or virus just as easily as a large company. Also, many smaller companies are becoming very aggressive with wireless deployments. And the cost savings from running their office phones over their data network using IP telephony is perhaps even more appealing to SMB organizations. Many small companies view their network IT investment to be just as critical to their business as their large counter parts. Finally, the Internet has spurred the use of networking in managing supply chains. Many smaller companies that sell goods to larger companies, especially retailers, must network their businesses processes with the retailer. Paper-based supply chain management is quickly becoming a thing of the past for all companies. These new SMB-Class products and the SMB-Class products we will be releasing in the future will help smaller companies address all of these business needs.

Besides these recently released products, what else is Cisco doing to make intelligent networking technology more accessible to smaller businesses?

Peter Alexander: Well, over all we have an existing investment of $2 billion over the next two years to develop and deliver products specifically suited to small and medium-sized businesses. In June John Chambers publicly stated we would be rolling out over 30 new products for SMBs over the next year. So there are a lot more custom-designed networking products for SMBs on the way. We are also developing financing, education, and other services tailored for SMBs. And as our collaboration with Microsoft earlier this year demonstrates, we are building relationships with application vendors to provide SMBs packaged networking offerings that make setting up and running networked business operations such as customer relationship or supply-chain management more streamlined, what we like to call a "focused whole offer." In addition, we have re-segmented our global sales organization to better synchronize our efforts with our channel partners, who make 100 percent of our SMB sales. We are also actively recruiting channel partners with specializations in helping SMBs.

John McCool: As part of our efforts, we will continue to take our most advanced technologies and bring them into SMB products. Much of our work will focus on creating the right-sized products that flexibly integrate wireless, IP telephony and security into our Catalyst switching platforms. Since SMBs have such diverse needs, networking equipment for them must to be adaptable so these businesses can pick just the features they need for their particular operations. As a major step in addressing this goal, earlier this early we announced the Cisco 1800, 2800 and 3800 Series, known collectively as the Cisco Integrated Services Routers. These devices, especially the smaller scale 1800 and 2800, are ideal for smaller businesses since they combine support for data, voice, video, and security all in one box. These routers make the highly touted concept of converged communications far more viable for businesses with modest IT resources.

Traditionally, Cisco and the networking industry have focused on building equipment for major corporations that run complex networks. Why is Cisco now creating customized products, services and support for smaller businesses?

Peter Alexander: It's no secret that most of the networking industry has focused over the last 10 years on the needs of major corporations. Certainly, smaller businesses-those companies with 20 to 1000 employees--have been using networking products, mainly ones designed for the branch offices of larger corporations. But since these weren't specifically designed with SMBs in mind, they didn't always meet their needs as well as they could have. But now networking technology has reached a point where it can be "right-sized" for smaller businesses. Router and switching technology has matured enough over the last 10 years that less complicated, more affordable network equipment is possible. Also, a decade ago only larger companies had broadband connections. Now, virtually every company is using networking connections to transfer significant amounts of business information within and outside their companies. So, clearly, the reliance of smaller businesses on networking technology has increased to the point today where it is just as crucial for their success as it is for larger companies.

With that in mind, the SMB market has become extremely promising as these businesses become increasingly interested in intelligent networking infrastructures. There are hundreds of thousands of companies out there that now want to do more with their networks but until now have not had the right tools--ones they can afford and cost-effectively manage. These smaller businesses now comprise a $10 billion worldwide market for networking equipment and the market is growing at over 15 percent a year. There are over 500,000 SMBs in the United States alone. The potential and the value of this market are already bearing out in the early stages of Cisco's SMB-Class Solutions initiative as we are reaching 20,000 new customers per quarter. That's a lot of customers.