6/19/2006 -- Everybody can relax: Nortel Networks Inc. has a strategy -- in the SMB segment, at least. Nortel last week announced an expansion of its SMB portfolio with new wireless LAN, Ethernet switching, security and converged voice and data products. Nortel's revamped portfolio, which is slated for availability in August, consists of four new products, officials said: the Business Ethernet Switch (BES) 100 product line, Business Secure Router (BSR) 222, Business Access Point (BAP) 120 and Business Element Manager.

Analysts like what they see in Nortel's revamped SMB portfolio. At the same time, they caution, Nortel must also contend with price tag-obsessed SMB buyers. On paper, anyway, there's not that much to distinguish Nortel's new SMB offerings from those of commodity competitors: The company's new BES 100 switching family consists of two 24-port switches and two 48-port switches (two of which include PoE on half their ports); the BSR 222, on the other hand, is a small-business router with four ports, designed to work with DSL or cable broadband connections. And the BAP 120 is an A/B/G access point that supports multiple SSIDs and which can be used in bridge or repeater modes, too.

"Nortel will be increasing pressure on SMB market rivals such as Cisco, 3Com and ProCurve by Hewlett-Packard as well as a slew of smaller companies including D-Link and Netgear," says Steven Schuchart, a senior analyst for enterprise infrastructure with consultancy Current Analysis. "However, in the SMB market, brand loyalty or even a perceived need of advanced features is often sacrificed on the altar of the almighty dollar. Small businesses are notoriously fickle, as are the SMB VARs that often serve as the customer's interface to the world of IT technology." As a result, Schuchart says, Nortel must play to its strengths -- the proven value of its Business Communication Manager (BCM) family -- and work to build brand recognition among SMB buyers: "Sales of this new equipment will be most successful when combined with Nortel's BCM products. Nortel will struggle with non-VoIP sales of this equipment until it gains a much higher profile with SMB VARs and customers."

To a certain degree, Schuchart says, Nortel's strategy is determined by its enterprise switching bete noire: Cisco. "As the only Tier 1 competitor to Cisco, Nortel needs to meet it at every point in the market, and these products do a lot to strengthen Nortel's SMB product line and show customers its commitment to that product line," he points out. "Nortel, in announcing all of these products together, is in effect creating the start of the sales process of a small network or VoIP solution sale for a lot of new VARs and customers. The solution sale will be important, especially considering the success Nortel has had with products like the BCM 50. Nortel has been very careful to not overburden this product line with features that will not be used by SMBs, which would drive up costs. The product line, particularly the switches, shows a lot of thought into the feature set."

So far, so good. But Schuchart says Nortel still needs to cross a few Ts, dot a few Is, and otherwise tidy up its SMB refresh-in-progress. "Nortel hasn't announced [pricing or warranty] for these products and competitors will take advantage of that until Nortel provides details. ProCurve, Cisco, Enterasys and Alcatel all offer limited lifetime warranties and Nortel will need to match that to compete. ProCurve even offers lifetime software updates without benefit of a service contract. Nortel must be able to match these warranties or beat competitors significantly on pricing," Schuchart concludes. "Nortel is offering its new SMB products as a total solution, yet it fails to brand the product line as a whole that way, instead presenting them as a loose collective. A clear SMB solution branding would benefit Nortel's sales of these products, particularly considering that Nortel is late to market in comparison to its competitors." -Stephen Swoyer