Netgear Looks to Channel for Growth

By Joel Shore  |  Print this article Print


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NetGear is seriously moving into the SMB space and is aggressively looking for VARs.

Hot on the heels of an exclusive distribution agreement for the Japanese market with Softbank BB, networking hardware vendor Netgear Inc. is gunning for big gains in the U.S. market for 2004. Not that 2003 has been bad: for the first nine months, the company's profits grew by a healthy 61 percent.

"Security hardware for companies with 20 to 100 employees is going to be a big area for us," says Netgear Chairman and Chief Executive Patrick Lo. "These companies are looking for affordable solutions. Cisco and Proxim are just too expensive. Their products are two to three times the price of ours."

So what about products from Linksys? That presents a problem for Cisco Systems Inc., Linksys' parent, according to Netgear President Ray Robidoux. "If Cisco goes in and pitches a product at a low price, how do they then justify Cisco's higher prices?" he asks. It's a conundrum.

Security is just one of three areas where Netgear has big plans, says Lo. "Wireless, security, and switching are where we are concentrating our efforts."

To win more customers among small and medium-size businesses, Netgear is adding products and beefing up its channel presence through enhancements to its Powershift Partner Program.

"We've been under an aggressive VAR recruiting effort with Powershift," says Robidoux. The program has levels of commitment and the company is planning to implement a certification program. "We are very active in participating in channel events," Robidoux adds.

Providing VARs and solutions integrators with appropriate product is a key strategy for 2004, according to Lo. As it builds out its channels, Netgear is poised to offer additional security products, high-performance wireless gear, and a host of products for the gigabit market. Those product are likely to include managed SNMP switches operating at both layers 2 and 3.

In addition, Lo and Robidoux portray Santa Clara, Calif,-based Netgear as a one-stop shop for all manner of networking gear, wired and wireless, managed and unmanaged.

"We have unique products, like wireless virtual private networking, and we can offer a layer 3 switch for $4,300," says Robidoux. "With our full product line, a VAR doesn't have to go to two or three different vendors for a total solution." An added benefit, Robidoux says, is the elimination of finger pointing, a common occurrence when glitches arise in a multivendor environment. "You'll have to choke only one throat."

To differentiate its business and consumer products from each other, Netgear has adopted different product-packaging designs. Dropping its traditional metal industrial look, products destined for the retail marketplace now sport sleek silver plastic cabinetry. "It's not only more attractive, but it's more inviting and less intimidating-looking to the retail and consumer markets," says Lo.

"We know that making the leap from retail to business products can be tough, but Netgear is a well-known name," says Robidoux. "For VARs and solution providers, we've moved from unmanaged to managed products. As a result, we are seeing higher-quality, more sophisticated VARs selling solutions that are based on our products."

Netgear's current distributors include ASI, D&H, Ingram Micro, Tech Data, and, in Canada, EMJ.

Veteran technology journalist Joel Shore is editor of Reference Guide, publishers of reviews and custom content for the technology industry. He co-founded and was the longtime director of the CRN Test Center.

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