Cisco Systems Inc. has added D&H Distributing Co. to its two-tier channel infrastructure in a move both companies say will spur incremental sales of the networking vendor’s products for small and midsize businesses.
Cisco SMB products are available immediately from D&H, whose VAR and integrator base overwhelmingly comprises resellers that service and sell to small and midsize businesses.
For the Harrisburg, Pa.-based distributor, a scrappy, family-run wholesaler that has survived a tough market that has swallowed many bigger competitors through acquisitions or outright failure, adding the popular Cisco brand represents a significant milestone.
“From our vantage point, I look at this as being as significant as when we launched Microsoft in 1995 and Intel in 1998,” said Michael Schwab, the distributor’s vice president of purchasing. “Cisco has the most appealing products in the market for this product profile.”
The addition of D&H extends San Jose, Calif.-based Cisco’s reach into the vast small and midsize business market. John DiLullo, Cisco vice president of worldwide distribution, said while researching whether to partner with D&H, the company found an overlap of only 15 percent of resellers that were already sourcing Cisco SMB products from other distributors.
With 10,000 resellers actively sourcing product from D&H each month, the untapped potential for Cisco is considerable.
The SMB marketplace this year is spending an estimated $163 billion in IT products and services, $117 billion of which is flowing through the channel, according to New York-based AMI Partners. VARs and integrators that do at least 50 percent of their business in the SMB market number more than 44,000, AMI says.
Enticed by such eye-popping figures, Cisco and an increasing number of IT vendors, selling everything from desktop applications to complex customer-management systems and wireless networking, have been working double time to grab their share of the market.
“It’s been a huge focus for us in the last few years,” DiLullo said.
Cisco boasts that in the past 18 months it has introduced 30 products targeted specifically at small and midsize companies, launched a leasing program with deal thresholds attainable for resource-strapped companies, enlisted 1,200 channel partners in its SMB-Select program, and launched the SMB Support Assistant services offering.
Cisco considers SMB its largest opportunity and fastest-growing customer segment. Adding D&H will accelerate the company’s penetration in the space, DiLullo said.
Driving much of the demand in the SMB market for networking solutions are the dynamic and constant need for security and developments in wireless technology. Once the province of large enterprises and a consumer play, more suitable price points, range and functionality have made wireless an SMB market reality.
Wireless is a good networking option for small and midsize companies that could not afford the infrastructure investment required by networking deployments, DiLullo said. “Today you have wireless as a liberating technology.”
Schwab said the Cisco SMB line will fill a whole in the D&H line card. “It’s a solution set that we’re not already bringing to our customers,” he said.
Cisco is working with the distributor to quickly authorize and certify resellers that want to carry the product. The vendor also will participate at reseller events D&H organizes periodically across the country, Schwab said.
The distributor’s sales force, both in the field and at the call center, have received instruction on the Cisco line and how to sell such products as firewalls, routers and wireless device as part of a solution that also includes other brands, Schwab said.
“We’re going to heighten awareness of the product,” said Schwab. “We really think this is a great opportunity for our resellers.”
The Cisco line will also contribute to the D&H bottom line, although Schwab did not have projection estimates. He said the distributor is enjoying double-digit growth this year and will close with $1.3 billion in sales. D&H, which as a distributor does not sell directly to end users, is a privately owned company.