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Cisco enters small business niche

The networking giant formally launches an over-arching strategy for one of the few markets that has eluded it up to now: the small business.

The 800-pound gorilla of networking is going small.

After months of targeted rollouts, Cisco Systems (CSCO) formally launched an over-arching strategy today for one of the few markets that has eluded it up to now: the small business.

Rival 3Com (COMS) has long dominated this lucrative niche. Microchip monolith Intel (INTC) weighed in yesterday with its own offerings for the small-office customer.

They're all looking at the same statistics and seeing dollar signs: Boom in middle marketThere are more than 8 million small businesses in the United States, according to various research firms, and less than 30 percent of them are networked.

"This is Cisco's first major step in addressing customers with less than 100 employees," said Howard Charney, senior vice president of Cisco's small- and medium-sized business unit.

Cisco executives believe they can offer a unique vision for the small business that has enough employees to necessitate a more sophisticated approach to networking but requires the same ease-of-use features of low-end gear.

Included in the new offerings are new switches and hubs that support both 10 mbps (megabits per second) and 100 mbps Ethernet speeds as well as a Web hosting server. Combined with already shipping routers, firewalls, and hubs, Cisco believes it can now offer complete network packages for small businesses. The company will even offer a network leasing program for customers in this segment.

Some analysts believe Cisco's entry into the small business market could be a boon for the sector, but they wonder if the company--which dominates corporate enterprise networking--can play to the throngs of customers who have little idea of what they need to do to get a network up and running.

"They have more challenges than Intel," said Dianne Myers, analyst with market researcher In-Stat. "But I think it's good for the overall market. I think it's good for demand."

Competitors also weighed in on the entry of Cisco and Intel onto their turf. "I think they're all formidable competitors," said Chuck Yort, director of small business operations at 3Com. "I think they all come with different pieces of the puzzle."

The new gear will start shipping next month, with the 8-port 10/100 hub priced at $645 and the 8-port 10/100 switch priced at $1,295. The new Web hosting server, called the Micro Webserver 200, is priced at $1,595.