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Cisco, Nortel target small, medium firms

Cisco, Nortel target small, medium firms
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First Published: Wed, Jul 18 2007. 08 29 AM IST
Updated: Wed, Jul 18 2007. 08 29 AM IST
Growth of demand from Indian SME (small and medium enterprise) customers has local units of US computer networking equipment companies Cisco Systems Inc., Juniper Networks Inc. and Nortel Networks Corp. unveiling tailor-made solutions and finance schemes for these price-sensitive clients.
Up for grabs is an annual market estimated at $459 million (Rs1,854 crore) and expected to expand by about 25% annually for the next three years. SME “investments in networking hardware are anticipated to grow at a compound annual growth rate of 23% over three years. Although India’s medium businesses are driving investments in networking hardware, small businesses are exhibiting high growth as well,” said Neha Jalan, analyst and consultant at AMI-Partners, a research firm that focuses on SMEs.
Networking equipment includes routers, switches, cables and wireless devices, as also the software applications used to run them. AMI-Partners defines small businesses as firms with less than 99 employees and medium-sized firms as those that have 100-999 people on their rolls.
On Tuesday, Cisco Systems (India) Pvt. Ltd said it was expanding its reach in smaller cities and towns, such as Coimbatore, Lucknow and Bhubaneswar, increasing its 1,500- strong distributor base by another 600. The firm has built a portfolio of 50 products targeting such customers in the six months since it launched a SME-focused business in India. It has plans for 30 more products in the next year.
“There are around 7.6 million SMEs in India, of which between 700,000 to one million are ready to adopt IT on a large scale. Our SMB (small and medium business) is growing at twice the industry average of 40%, and we are putting in more company resources to pack in mobility, security and connectivity in our products,” said Pramodh Menon, a Cisco senior vice-president.
Nortel Networks India Pvt. Ltd is also pushing hard, with products starting at less than Rs20,000. “By 2009, the SME vertical will contribute 25% to the revenues for Nortel in India,” said E.R. Ashok Kumar, director of enterprise, SME business, at Nortel.
SME-specific products are customized to address the needs and problems of small firms. That includes dealing with insufficient cash flow, difficulty in raising capital for growth, rising operational costs and difficulty in accessing business opportunities. Bundled software solutions with less than five licences, for instance, aim to ease costs of SME customers .
Now firms such as Cisco and Juniper Networks India Pvt. Ltd have started selling hardware that come pre-loaded with some software applications. Last quarter, Nortel signed a deal with telecom services provider Bharti Airtel Ltd to provide connectivity to SME customers. Vendors are also offering attractive finance plans to make it easier for SMEs to bear the high costs of installing and maintaining networking equipment. Cisco launched its finance scheme EasyLease with Cisco Capital a month ago to enable monthly or quarterly payments for its products. Customers can pay over a period of up to five years. Nortel has similar finance plans.
Juniper doesn’t see the need for finance plans yet, but does jointly bundle its products with distributors at price discounts, says Sanjay Jotshi, its director, enterprise and channels for India and Saarc. Others, such as Subhodeep Bhattacharya, the country manager for Procurve Networking,, part of hardware giant Hewlett-Packard India Pvt. Ltd, provides a lifetime warranty and free support as a differentiator among peers.
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First Published: Wed, Jul 18 2007. 08 29 AM IST
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