I went to a Cisco Business Solutions Workshop today. It was aimed at the Small and Medium sized Business market and Cisco were expecting around 400 resellers to be in attendance. Considering the event was held at the Vauxhall Vehicle test track in Millbrook with test drives on offer I think the turnout was quite high.
Cisco certainly know their stuff when it comes to marketing. Much of the event was marketing oriented. The equipment vendor is going after the SMB market in a big way. 2009 is what they call a transition year where they will be getting their product mix right. In 2010 and 2011 they then expect a big push to gain market share.
You have to look at the market numbers to understand why they are doing this. The Cisco share in the Service Provider and Enterprise markets is quite high. However in the SMB space it is a different story
Business size Global TAM Cisco Share
<250 pers $15.9Bn <$300m
<100 pers $9.9Bn <$100m
The source is Cisco and although the numbers might be broad brush it is easy to see why the company sees the SMB market as a huge opportunity. Next year they are planning to spend $100m on marketing specific to this sector.
This market opportunity also has upsides with sales of additional services such as Webex and video conferencing thrown into the mix.
In fact it seems to me the biggest challenge for many in this industry is how to migrate to a services oriented business model. As a Communications Service Provider Timico is already doing it. However if you earn your living selling and installing hardware your mix is going to have to change.
The cost of hardware solutions is plummeting and it won’t be long before it is thrown in free everytime someone signs up for an installation and ongoing maintenance programme. We were told that the world GDP is in the region of £12Trillion and over the next 5 years 25% of this is going to be based on managed services (Cisco’s numbers not mine).
As the world enters an economic downturn it is worth noting that during past such periods SMBs have been the first to recover and start spending again. I certainly wouldn’t bet against Cisco succeeding in this market.