Netgear: No need to copy rivals' desperation pricing

Networking vendor's sales chief says firm is not afraid of Cisco and HP as it gears up for tilt at the mid-market

This week ChannelWeb caught up with Lee Finck (pictured, below), vice president of worldwide sales at Netgear's commercial business unit, to chew over trends in the networking space.

With market watchers claiming the ongoing turf war between HP and Cisco is hurting every switch vendor's average selling prices, the Netgear man maintained that his firm can still make money while competing effectively. He also outlined his company's ambition to make waves in the mid-market, and explained how he will manage the competitive campaign against the market's alpha males.

ChannelWeb: How can Netgear win out in the mid-market against the more established enterprise vendors?

Lee Finck: We are not daft enough to say we are going to go 100 per cent head to head with a vendor whose name begins with ‘C'. We have to be a great augmentation for the right price point. A great example is in local government or education. They are buying switching repeatedly and are not able to afford refreshes. We are not necessarily [advocating] rip and replace. But we need to give them confidence that they can stay with us.

Has the increased competition between Cisco and HP resulted in margin erosion across the whole market?

There has been some, but there are two ways to look at this. We try to stick to our knitting and that tends to serve us well. We are so lean, we are built for these times. Competitors have had to restructure and let go of employees. Our strategy and personnel levels stay pretty much the same. We experience pain, like everyone, but it sort of plays into our hands.

Who is having to swallow the biggest hit - resellers, distributors or vendors?

Everyone feels the squeeze, from the end user up to the vendor. But we tend to make money at lower price points than some of our competitors. We can end up being the last one standing and still not resort to desperation pricing. When the big animals go at each other, they sometimes pay for the business. We do not do that.

There is no way to avoid the fact that the squeeze has affected us all in some way. But our machine has been built from the ground up to be lean and fast. We are resilient.