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D-Link targets unified communications

Eyeing 50 per cent margins, D-Link is preparing to target the SMB with new UC offerings

Taipei, Taiwan – In a surprising turn of events, D-Link (TPE: D-LINK) is going to play in Cisco Systems‘s (NASDAQ: CSCO) space. Company CEO J.C. Liao said that he envisions D-Link expanding wireless and switching.

The switching area, he believes, will lead to a build-out in unified communications (UC) for the company. “That means wired or wireless. Everything in the office will be managed by switches,” he said.

The margins in UC for D-Link are between 50 and 60 per cent and nearly approach Cisco’s average UC margin of 70 per cent. In comparison, D-Link’s wireless products do not reach 35 per cent margins, Liao said.

Cisco acquired Linksys about five years ago and invaded D-Link’s market. However, Liao says is not the reason why D-Link is interested in UC. “It’s been five years since Cisco acquired Linksys. That first day we said of Linksys that it would slow down, and in the last five years they have slowed down,” Liao said.

Liao cited a statement from Cisco CEO John Chambers saying that Linksys’ fast growth eroded margins by one per cent. Liao said that Linksys is a major competitor for D-Link in the U.S. only.

Liao said that it will enhance D-Link’s switching capabilities to start to deliver UC solutions simply because the profit margins are high. He anticipates that D-Link channel partners can get 50 per cent and higher margins in the SMB markets globally.

D-Link’s UC products will be suitable for wired and wireless environments with 200 seats or less, but all managed by one device. Liao is not discounting the enterprise market, but said that D-Link’s UC products will be for data communications. There will be no voice or GSM mobile UC solutions, he said.

“D-Link’s offering will not go as far as to include unified messaging or softphone solutions,” Liao said.

Liao does not believe D-Link has the technology or the credibility to serve customers with those needs or in the data centre. “Cisco occupies the back end, but other departments or smaller office subsidiaries with 100 or 200 people, or even 10 to 20 employees, that’s where we are going to compete. We are on the edge,” he said.

Currently, D-Link has roughly 1,000 system integrators in its North America and European channels selling its UC products, mostly to branch offices. Beyond that, Liao wants its channel to think about large corporations along with government and telecommunications opportunities for its UC product line.