Green nook : Big Brands, Bigger Challenges!

In 2009, with the development of Internet and network applications in India,
the router market experienced steady growth. Businesses gave a notable boost to
the equipment market, security and convergence became key words for routers, and
wireless routers too experienced good growth.

With regard to market structure, the router market continued to rebound,
fueling the growth of the sales volume of entry-level, mid-range and high-end
routers. Government and finance sectors became bright spots among the industry
markets, in addition to the operator market.

According to the recent market analysis, the router market grew by 10.5
percent to a couple of thousand crore rupees during 2008-09. Moreover, the SMB
market segment registered impressive performance, giving a boost to the router
market. The trend of SMBs moving away from brand-conscious decision is and will
be a challenge for the big brands in this market segment. SMBs expect value for
money-features, quality, service and cost determine their choice.

Meanwhile, it is also interesting to see small players and newer entrants
discovering the gap in the market, and determine that there is a market in this
gap. From the market statistics, it is observed that this gap contributed to a
smaller percentage of the marketshare for them now, but it is highly possible
that this gap would become wider moving forward.

These smaller brands/new entrants are also better placed to react quickly to
an emerging opportunity than their larger rivals. May be specialization is the
secret to success for smaller brands that compete in big-brand markets, whether
it is routing or switching. Big brands are finding it little difficult to match
up to the demands of a value-conscious customer expectation.

Small and medium businesses are uniquely placed to maximize a specialized
market because their scale allows for flexibility and adaptability. The best
time to firm up these SMB focused new entrants' USPs, and other business
strengths and weaknesses is when their company is in its infancy. Once they have
a definitive picture of their strong suits, they will be in a better position to
begin planning to play to their strengths.

Routers provide many features that make them critical components of the
network infrastructure. Beyond fast Internet access, routers play an important
role in network security and reliability. Features like access control, QoS,
resistance to outside attacks, protection of internal network devices, and the
integrity and privacy of corporate network traffic may all depend on the router
you choose.

Today, the router market is changing. The same economies of scale that have
revolutionized the personal computer (PC) market are happening now for the
commoditization of routers too. Small players featuring rich products are
helping to bring new competition and lower prices to the router market. These
products deliver superior price and performance same as the big-brand
manufacturers, and is transforming the router market in India.

Routers can represent a significant percentage of a company's total network
infrastructure costs. Several manufacturers are now offering commodity routers
that support scalable Ethernet and leased lines from T1 through OC12.

By deploying commodity routers, many companies can possibly save tens of
thousands of dollars on equipment and support costs. Some of the big-name router
manufacturers are also using similar technology as these smaller brands to
develop their products. However, what these companies save by using commodity
hardware and technology, they often pocket instead of passing the savings along
to customers.

How much can companies save by utilizing commodity routers instead of
big-name routers? The answer depends on the application need. Many enterprises
need to deploy three or four different products offered by few manufacturers to
provide the same network services, which drives up equipment costs.

The system savings with commodity routers gives many companies the budget to
purchase redundant systems for network failover or hot spares. Advanced
applications like this are often out of reach for many who purchase
higher-priced networking products.

Many system integrators are now designing and installing networks that use
alternatives to the most expensive big-brand routers. As this new breed of
low-cost routers can reduce equipment costs, and help save money on technical
support and warranty services.

Irrespective of whether it is telecom or datacom products, today's SMBs does
not worry much about brand of the product they choose to use! Yes, this is
happening and is evident in medium-sized and small networking and telecom
product market segment. More importantly, system integrators have good range of
choices to pick and they also feel their profit margins are much better while
meeting all the technical requirement of the end user network demands, by
shifting away from bigger to smaller (or not so familiar) brands.

It is time for the 'big Bs' to re-think their competition, ie thinking beyond
the equivalent big players in the market. Detailed queries to find out who is
truly grabbing the marketshare and digging a little deeper on that, would help
what more they can be doing to sustain their market share. Going forward, there
is going to be no more premium paid, just for the brand alone.

V Srivathsan, Technology Consultant