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Netgear Looks to Channel for Growth

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 […]

Written By: Joel Shore

Dec 11, 2003

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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.

Netgear Looks to Channel for Growth

Joel Shore

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