9/26/2005 -- Cisco Systems Inc. last week announced a new SMB offering for its Catalyst switching line, the Catalyst Express 500 Series family. Also last week, Cisco announced the Catalyst 2960 Series, a new line of fixed-configuration switches that are designed to provide wire-speed Fast Ethernet and Gigabit Ethernet connectivity for desktops.

Cisco says its new Catalyst Express 500 Series line of wire-speed, Layer 2-managed Fast Ethernet and Gigabit Ethernet switches are built specifically for SMBs that plan to deploy converged networks.

Cisco seemed to have all of its ducks in a row last week but one: The company’s new SMB offerings face entrenched competition -- from Cisco itself, analysts warn. "[T]hese products not only directly compete with some of Cisco’s own Linksys products, but ... Cisco is entering a market already filled with numerous fierce competitors," notes Steven Schuchart, a senior analyst for enterprise infrastructure with consultancy Current Analysis Inc. "The SME and SMB markets are largely price-driven and VARs in this sector are margin loyal, not brand loyal."

In this respect, Schuchart argues, Cisco’s 500 Series and 2960 Series offerings aren’t priced aggressively enough for SMB customers. And there’s also a question of reseller interest, he says. "There are also concerns that the traditional Cisco reseller will not be willing to deal with the difficult SMB/SME customer where the profit potential is so much less than it is with enterprise customers," Schuchart writes.

And then there’s the question of Linksys, which is perceived as Cisco’s SMB brand by default. Cisco’s Catalyst Express 500 tops out at 24 ports -- similar to other SMB offerings from budget vendors such as NetGear or D-Link -- and may not be sufficiently differentiated from Linksys’ own offerings. "This SMB/SME market will definitely feel Cisco’s presence, as the company’s name and reputation will be enough to move some switches in this space," Schuchart concludes. "However, after competitors get over their initial panic about having Cisco move into this market, they will find that Cisco is currently less of a threat. The SMB/SME market is driven primarily on price, and Cisco’s biggest impact will be when these products are bundled with a Cisco IP telephony solution." -Stephen Swoyer