Jumping Into the Low End

I am not sure if its coincidental, but two technology companies Cisco and Digium, which are at opposite ends of the size and philosophy spectrum are rethinking their go-to-market strategies addressing the low-end business market.

Both companies have come up with appliances that will make it easier for small businesses to adopt their technology and both are thus able to expand their channels to include less tech-savvy channels. That means that you dont have to be programmers to sell and install their communications software platforms. Its possible even I might be able to do it in the 90 percent of the cases where it works correctly out of the box its that easy.

Digiums path is quite different than Ciscos. It involves that awkward retooling companies must go through once the entrepreneurial stage ends and sustainable growth must be achieved with ever-increasing scale. New CEO Danny Windham of ADTRAN fame is the man for the job he knows how to grow businesses. He is fond of saying that Digiums next phase is to figure out how to cross the chasm from the early adopters to the mass market. Its appliance and revamped channel program are expected to jumpstart this effort (see related story).

In Ciscos case, the gap was more a glaring hole in the gearmakers No. 1 market share positions in nearly every realm in which it plays. In the small business market, the company laments it only has 17 percent of the market (of what exactly, I am not sure data, wireless, voice, all of the above?), but while this is probably more than any one single vendor, its not quite good enough for Cisco, which (apparently) has grown accustomed to market dominance.

Of course, Cisco already bought its way into the low end of the market with its Linksys acquisition. The new product, the Smart Business Communications System (see related story), competes with the hosted/CPE hybrid offer LinksysOne in certain regards, but the company says its not a complete crossover, and even if it were, the pitiful market share Cisco has in the small business arena makes cannibalization unlikely. Instead, execs said the bifurcated strategy only serves to meet small business buyers in the manner in which they buy.

Therein lies the rub. Small businesses are commercial entities but often buy like consumers, shopping for technology at big box stores as often as through a VAR or agent.

This idea is driven home by the recent entry of Best Buy into the telco business with its purchase of Speakeasy (see related story). Best Buy was looking for a nonretail store approach to the SMB market. Just exactly how it will interact with its new subsidiary remains to be seen, but the imagination runs wild with the possibilities for the Speakeasy channel. One idea is users could buy the gear/software license at the store and call the partner for install and maintenance. Whether or not these musings come to pass is beside the point. Our view of how to approach the low end of the market is forever changed by this bizarre pairing. Its like my favorite line from Harold and Kumar Go to White Castle: Weve gone too far. In the movie, the dorm room and the forgotten cell phone are just paces away, but sometimes you just cant go back.

Its about time the small businesses got their due. Its not surprising that its happening now. While there are plenty of larger companies in the SMB space that will continue to get the majority of the attention, the small businesses are finally feeling the benefits of the consumer product evolution into the business/productivity space. While normally cool apps are pushed down from the enterprise and/or government, a lot of innovation is beginning to be pushed up from the consumer arena into the business space. Wireless apps and certainly anything categorized as Web 2.0 are prime examples.

Whats exciting about that to me is finally vendors will stop saying that small business users dont want cool apps and features. They are using them in their private lives already buying them with their own money. Sure, they may prize simplicity over function, but that challenge is largely overcome by interfaces that have been tested in the hyper-critical consumer world. Small business users have that expectation now that a simple interface can deliver a lot of power. Besides, as Gen Y gets into the workforce en masse, the allure and the memory of the almighty key system will die away.

Your job if you choose to accept it is to be there with something simple and effective to take its place.

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