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Networking cheap for little guys

The small office, home office market is reaping the benefits of an ongoing price war in the Ethernet-based adapter card and shared hub hardware market.

It's a wonderful time to be a small business that wants to be networked.

The small office-home office (SOHO) market is reaping the benefits of an ongoing price war in the Ethernet-based adapter card and shared hub hardware market. NetGear, a division of Bay Networks (BAY) dedicated to the small business market, has begun to compete in an environment populated by the likes of 3Com and Intel.

Though switching technology offering segmentation of ports and bandwidth management gets most of the publicity these days, the SOHO market remains a bastion of nonconnected PCs, according to several analysts' studies. A price war is currently driving down the costs of connecting PCs with easy-to-use hardware called hubs and 100-mbps Ethernet technology found in network inferface cards (NICs), making a compelling case for small offices to get connected.

NetGear will introduce new 4-port and 8-port hubs based on 100-mbps Ethernet technology next Monday. The two models--the FE104 and the FE108--will be available next month for $259 and $519, respectively, driving the cost per port for a shared Fast Ethernet SOHO hub below $70.

"Right now, it's the lowest-priced 100T [Fast Ethernet] hub on the market," said Esmerelda Silva, analyst for market researcher International Data Corporation. "It's even lower-priced than some of the second- and third-tier vendors in the market."

"When you start to get these types of price points, you see the market move along," she noted. A new FA310TX PCI-based Fast Ethernet NIC is available immediately from NetGear for an $85 list price, undercutting recent moves by 3Com and Intel in the same space.

The hub and NIC products are targeted at small architectural firms, doctors' and dentists' offices, travel agencies, and other operations that could make use of Fast Ethernet bandwidth to roll out multimedia applications or put a set of X rays on a hard disk. Only about 50 percent of businesses with 10 to 50 employees are connected to a local area network, according to 1995 figures from IDC. Less than 16 percent are connected for businesses with 1 to 9 employees, according to the study.

"What we?re bringing is the ability to run their business the way they'd like to," said Steve Dix, sales manager for NetGear products.

NetGear's mission is to take the technology developed within Bay Networks and market it to the SOHO market at low prices. "'Smaller, faster, cheaper' is the motto," said Patrick Lo, director of the NetGear product line.

Though Bay Networks has been an acknowledged leader in the Ethernet-based hub market for some time, the company has been known to be late with products that end up being priced higher than those of its competitors. That has changed, according to Silva, with the new NetGear spin-off. "They've done their homework this time," she said.