D-Link is among a host of networking vendors trying to nab a share of the SMB market. In the second part of an in-depth interview with ARN's NADIA CAMERON, local managing director, Domenic Torre, shares his thoughts on how the company has fared in the commercial market to date and how the vendor plans to win market share by tackling key vertical markets.
Q: What are the challenges D-Link faces getting into SMB?
It's about one challenge: our strength in the consumer space is our weakness in selling to business. We have been so strong in consumer that people look at us as only having solutions for that particular segment. It's about getting the right message out to the market. We need to position the product offerings as completely separate. And we're getting there. In the business space we have sub-brands: the xStack, NetDefend and AirPremier. The consumer products are all price driven.
Ninety-five per cent of the time if we're involved in an opportunity, we'll win it. That's because we've been able to demonstrate our back-end services, shown what the product can achieve against what the customer requirements are, and if we're invited to come in and assist resellers to win the opportunity, we win them more often than not. There's a side challenge in that we can be late to market with product, which gives our competitors opportunity. But when we come out with our solution, it's often far superior, even with our business-grade wireless or wireless switching technology and I'm very confident in saying that.
We're rolling these products out on a regular basis for SMB customers such as Rooty Hill RSL [in NSW]. It might only be a couple of wireless switches and 60-70 access points, but that's what we're good at and the kind of rollout we're looking for. And one of our strengths is having people that can work with the resellers and be involved in the installation if resellers have never installed the products before. They are then encouraged to come to our certification courses and go out and do the installations by themselves.
Q: One concern raised by resellers about consumer networking vendors pushing into SMB was the lack of credibility, product reliability and back-end support to step up the ladder. How are you overcoming this?
It's a hard slog to be honest. The only way to demonstrate your place is to engage. We also help the resellers to make money because once we're in there with that reseller we will continue to push business through them. Otherwise we may as well do what a lot of vendors do: let the distributors do all the sales work for us and not grow.
Right now, I have 50 people directly employed by D-Link and another 25 people indirectly. Our model is quite different to other networking vendors locally because we have a lot of autonomy in the region. All of our decisions about product and pricing are locally made and they're made quickly. Taiwan leaves us to our own devices to attack the market as we see fit, to take the opportunities where we see them, and to grow the company organically.
I started with the company nine years ago in Melbourne. The year before I started we did about $4.7 million in revenue. Last year we finished on around $88 million. The reason we have grown is because we know the market best and we put resources where they are required. We have opened offices in Melbourne, Brisbane and Auckland. Perth is pending. We will continue to up-skill and increase headcount to achieve growth.
Q: With Netgear coming from the bottom up, and Cisco coming from the top down, how is D-Link positioning itself against other networking vendors?
We have to know who our competitors are and we need to segment our products. In the consumer world, our competitors are Belkin, Linksys, Netgear and Netcomm to a certain degree. We all hold premium brand names and we continue to keep our price points up. Many others come through the ranks who are here one day, gone the next, but we have to stay aware of them so we know who our consumer competitors are.
Who are our true competitors in the SMB/mid-market? We compete with Netgear, probably at the bottom end of that pie. They have some good solutions, but I think we scale further up the tree. Another competitor is 3Com, who is as close a direct competitor as you'll get to D-Link. Then there's Allied Telesyn with a limited product portfolio. HP is another competitor, but the way I see it they seem to be addressing a very price point-driven market, with education and government in particular. And it's subsidised by the other products they have such as printers.
I think we will compete against Cisco, ultimately - we do already to some extent. We do have concerns about where they are heading: they have the ability, the marketing machine and the brand. The old 1980s motto was that no one ever got sacked for selling IBM can probably be the same for Cisco in networking. But I think there are many niches they can't address.
Q: Can you give us some examples?
There are a number of markets we are working in that aren't the traditional, cherry pickings. Everybody is in education, and we are as well, and it's a bloody market. The only way you're going to get a piece is by price point. But there are many verticals that aren't being addressed or targeted by all vendors - gaming and hospitality are examples. One of the bigger wins we had earlier this year was rolling out a wireless solution across all of Ford's Australian service centres. We competed with Cisco for that business. As a result of that win, we won a similar volume of business with Nissan. And the motorcar industry is just one vertical we can build on. So our approach is a lot more vertical because otherwise we're going to run into each other all the time. That's the reason why our model for systems integrators and corporate resellers is very selective.
At the end of the day, we know Cisco is trying to come down market, among others, and the Linksys scenario has bought Cisco time to move down the tree. What gives us a winning strategy and an edge is our mobility. We're not too large and we can react to the marketplace quickly.