Collaboration Commitment? Cisco SMB Partners Not Feeling The Love

Cisco Systems, for years, has assured partners that its sights are firmly set on becoming a powerhouse in the SMB market. But in the wake of the networking giant's decision to discontinue two of its flagship SMB products, some partners are questioning whether that enthusiasm is starting to wane.

"Given the kind of push Cisco has made in [SMB], for those of us who have really invested in it, we feel kind of left out," said the vice president of one SMB-focused Cisco solution provider who asked not to be named.

Cisco last year revealed plans to halt sales of its Unified Communications 500 and Business Edition 3000 collaboration offerings for the SMB market. Cisco first issued an end-of-life announcement for the UC500 and BE3000 in 2013 and, as of Jan. 20, 2014, officially stopped selling the products.

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Cisco SMB partners tell CRN that despite the growth they are seeing around other Cisco SMB product lines, such as the Cisco 300 and 500 Series switches, the holes left in their portfolios by the discontinued UC500 and BE3000 are significant.

"They have discontinued both of those boxes, which we had sold a significant amount of, and now I feel like [Cisco] is just bailing on our customers in that space," said the Cisco SMB partner.

The partner said his business sells 100 percent into the SMB market and had considered the UC500 and BE3000 the "perfect" Cisco products for his customer segment. The partner said he still has more than 50 customers using either of the products today.

The BE3000, as Cisco described it, was designed for midsize businesses with limited IT resources, bundling voice, conferencing, mobility, messaging features and voice gateway services onto a single appliance.

The UC500 also was designed for organizations with smaller IT footprints, combining voice, data, video and secure routing capabilities onto a single box.

Cisco, the partner continued, is positioning the higher-end Business Edition 6000 (BE6000) platform as the replacement for the UC500 and BE3000 but, because the BE6000 isn't designed to scale below 25 users, it's not always a good fit for smaller clients. And even when it is, he said, the BE6000 takes "ten times" longer to implement and deploy than the BE3000, making it a more difficult product to sell and support as a smaller solution provider.

"I don't really have a good upgrade path, other than the BE6000 product, which is far too big for a lot of our clients," the partner told CRN.

Several partners are attempting to move upstream by selling the BE6000, while others say they are being forced to seek out options from Cisco competitors that are better suited for the sub-25-seat market.

"I don't think we are going to have any choice but to look for other partners," said the solution provider. "We don't have a Cisco product that fits this space."

The solution provider said his Cisco business as a whole was down in 2013, but declined to cite specific numbers. He also said he's noticed a high level of turnover among his Cisco account managers, which is making it harder to do business with the networking giant than it has been in the past.

"They don't have the emphasis they did two years ago around SMB," the partner told CRN.

Other Cisco partners, it seems, are similarly scrambling for other voice and UC products to fill the gap left in their portfolios by the discontinuation of the UC500 and BE3000.

"I think [Cisco] made a very huge, strategic mistake getting rid of the BE3000," said the CEO of a Silver-level Cisco partner, who also asked not to be named.

Like the other solution provider, the CEO said the BE6000 has been "impossible to justify" for clients with fewer than 25 seats, not because it's drastically more expensive than the BE3000, but because it takes longer to deploy.

"The deployment costs are what kill you on [the BE6000] deal," said the partner, who does about half of his overall business in SMB. "The pricing of the product isn’t so bad, but it takes a long time to deploy. So, from a VAR perspective, for us to do the work, we have to charge more for us to get it done, which kills the deal.

"We just picked up another partnership with another phone vendor for those smaller-end deals. I love Cisco's products, and have a lot invested in them. But at the end of the day, I have to make money to pay my people," the CEO continued.

A third Cisco partner, who also requested anonymity, said his company is "leaning heavily" toward Barracuda Networks' CudaTel communications server as a replacement for the BE3000 and UC500.

"In one word, we're 'confused,' " said the partner, president of an SMB-focused Cisco solution provider. "We sold a lot of [Cisco's] UC500 phone systems, and I guess they are touting the BE6000 as their SMB-up-to-enterprise phone system, but we don't see it scaling that small. To be honest with you, we are scrambling to be able to address that space."

NEXT: Cisco Says It's Still Bullish On Small Business

Richard McLeod, senior director of worldwide collaboration channel sales at San Jose, Calif.-based Cisco, said the company decided to end-of-life the UC500 and BE3000 products to simplify the Cisco collaboration portfolio and to better meet SMB customers' demand for more advanced feature sets.

"Cisco made the decision to end-of-life the small-business UC and voice platforms because our partners and customers were asking for simplicity, features and scalability, and not multiple product lines," McLeod said.

McLeod declined to give sales figures for the UC500 and BE3000 prior to them being discontinued. But he said many Cisco partners are finding success selling the BE6000 as an alternative, and that Cisco in the coming weeks will be unveiling more collaboration options for the lower end of the SMB segment.

Cisco's end-of-life announcements for the UC500 and BE3000 came just months after the networking giant revealed plans to sell its Linksys business, which included wireless networking products for the SOHO and SMB space, to Belkin.

But despite doing away with some of its bread-and-butter SMB products, Cisco said it's more bullish than ever on the small-business space.

"The investment Cisco is making in this segment is significant," said John Donovan, vice president of global midmarket acceleration at Cisco. "I think we see that we have a lot of room to grow here. We have a long heritage of partnering and [SMB] is very much a partner business. We want to make sure our partners can make money."

Cisco, which defines "small business" as an organization with 100 or fewer seats, formally began its SMB push in 2008, when it pledged to invest $100 million into building out resources and products specific to that space. Cisco since then has unveiled similar initiatives, such as its commitment last year to invest $150 million into Partner Plus, the Cisco partner program for solution providers targeting the midmarket and SMB segments.

Meanwhile, Cisco said the number of its partners holding the Cisco SMB Specialization -- something required for partners to reach Cisco Select certification status -- was up 24 percent year over year from 11,000 in February 2013 to 14,000 in February 2014.

Cisco declined to say what percentage of its overall revenue came from the SMB market in 2013, or what its total SMB sales were for the year.

Dan Schwab, co-president of D&H Distributing, a Harrisburg, Pa.-based distributor, said he definitely sees Cisco continuing to invest in the SMB market and that D&H's Cisco SMB business was up in the "high single digits" last year.

D&H recently rolled out an Enablement Training Series for Cisco partners, providing free, on-demand training to help them prepare for the Cisco SMB Specialization exam. D&H, as part of the program, also is offering solution providers up to two testing vouchers so that they can take the exam for free.

Schwab said he has reason to believe Cisco is readying a replacement for the UC500 and BE3000. "We think very, very highly of them," Schwab said of Cisco. "And we have high expectations."

NEXT: All Eyes On Meraki

Cisco SMB partners jolted by the demise of the UC500 and BE3000 are eagerly awaiting word from Cisco on a direct replacement for those products.

In the meantime, many are wondering whether Meraki, Cisco's cloud-based Wi-Fi, routing and security solution, will become Cisco's go-to SMB offering.

"Meraki is an example of Cisco investing in SMB," said Neal Morgan, vice president of sales at Special Order Solutions (SOS), a Loomis, Calif.-based solution provider and Cisco partner selling into both the SMB and enterprise market. "It's an inexpensive wireless, but also firewall, switch and access point solution. These are cloud-based products, and they offer advanced features and capabilities, but are extremely easy to deploy and support."

Morgan noted that he will definitely be "faced with some challenges" when his legacy UC500 customers start asking about upgrade options, but that he is confident, overall, in Cisco's SMB strategy.

The president of one Cisco solution provider, who asked not to be named, also said Meraki has been an ideal fit for smaller-size customers and is helping to offset some of the pain caused by the discontinuation of the UC500 and BE3000.

"We're very disappointed about [the UC500 and BE3000], but maybe [Cisco] will pull some magic out of its hat," said the partner. "But we're still selling the heck out of Meraki. It's probably our No. 1 sale right now, and it's right in our wheelhouse of managed services."

The CEO of the Silver Cisco partner also said he wouldn't be surprised to see Meraki, or some other hosted platform, emerge to take the place of the UC500 and BE3000.

"I'm hoping that there is some deep, dark strategy, and that [Cisco] will roll out some hosted cloud and voice system, maybe on the Meraki platform, that will fill that void," the partner said. "But I think it would have been helpful for [Cisco] to have announced that strategy at the same time they end-of-lifed those products. I know a lot of partners that are very upset and don't know where they're going to go."

PUBLISHED MARCH 5, 2014