Efficient Networks rethinks retail

What’s a trade show without a little vendor gossip? At the recent NetWorld+Interop show in Las Vegas, SOHO network vendors buzzed that Efficient Networks, which is owned by Siemens, was exiting the retail market. One vendor heard it from investor relations contacts; another from their sales folks who heard it from reps at Circuit City and CompUSA.

Now if that’s true, it’d be pretty bad news – not just for Efficient but for the home network market overall. Efficient, the global DSL modem leader, makes fine, high-quality wired, wireless and power line gear, including a slick wireless/power line router that “Small Business Technology” columnist James Gaskin recently reviewed (https://www.nwfusion.com/net.worker/columnists/2003/0203gaskin.html), and I’m trying out in my house.

The company made a big splash at the Consumer Electronics Show in January with its SpeedStream power line gear. Since, it’s been viewed along with Microsoft and Motorola as a big name player with grandma-name recognition that could sell a lot of products at retail, helping spur the home network market from early adopter to mass adoption. 

Unfortunately, it’s not working out that way – at least initially. “We haven’t seen the traction we would have liked,” Efficient President Paul Reitmeier says. “So the type of mass merchandizing partners we have right now is under review. We went into this thinking there would be a significant desire for consumers to [buy at retail.] But instead, we’re finding they are staying tethered to the carrier and service provider for those products.”

But selling through service providers has proven difficult also. Broadband providers are notoriously slow to ink deals with hardware vendors. And partnerships aren’t necessarily leading to mass adoption by subscribers, at least not yet, anyway.  

Instat/MDR analyst and Digital Domicile columnist Mike Wolf says he isn’t surprised Efficient is exploring other sales avenues, given retail networking’s competitive environment. Visit any CompUSA or Best Buy and you’ll find a jumble of boxes from half a dozen vendors including Linksys, Netgear, Belkin, SMC, D-Link and Microsoft.

“We’ve seen an exodus over the last few years from 3Com, Intel, Sonic Blue and SOHOWare, as companies realized the high cost of competing at retail for relatively small margins,” Wolf says. “The market is following the natural evolution path towards consolidation, and retail consolidation is part of this. The only outlyer to the trend is Microsoft, but it can afford to compete in this market to serve its other strategic interests.”

But Reitmeier emphasizes he’s not just disappointed with retail sales volume, but with retail’s inability to provide customers more than just hardware.

“We want customers to get the best overall portfolio of services to wrap around the products they buy. So we’re looking at other combinations with our carrier and service provider customers as a vehicle to advance that,” he says. “We want to ensure customers get help desk support, and access to associated services, such as billing and warranty arrangements. How do consumers get a one-stop shop? How do they architect what they want to do in their home?”

As Efficient turns its attention to attracting service providers, it has an advantage over other SOHO network vendors in being owned by Siemens.

Reitmeier says after two disappointing quarters, Efficient’s new strategy will include “working more closely with other parts of the Siemens family, such as the information and communications networks group, to focus on the consumer who’s leveraging technology at home and for business. We’re uniquely positioned with our family of companies and offerings to make a service provider say, hey, now there’s a strategic partner.”