Comcast Prepared to Play in SMB Space

The usually secretive Comcast – at least until it’s ready to show its hand – has revealed what it’s been up to in the small-medium business (SMB) commercial customer space for the past year. According to an informed party who is, of course, prejudiced, the nation’s biggest MSO is making a serious move in an increasingly crowded space.

"I’m impressed with the amount of work they’ve done understanding this market and then putting together the packages that are going to make them successful here," said Michael O’Hara, general manager of Microsoft‘s communications sector.

As previously noted, O’Hara is prejudiced – because Microsoft has a lot to gain from Comcast’s aggressive SMB move. The two behemoths said this week that they are working together to give SMBs (defined by Comcast as businesses with 20 or fewer employees) a suite of Microsoft Communications products. Comcast, in taking the model the extra step, will host the services and provide 24/7 support. Microsoft, which already has 100 other multi-sized telecom customers doing similar things in the space, will "sit in the applications space," O’Hara said.

The deal was the first such hosted offer announced by a cable operator with Microsoft (and isn’t that a load of qualifiers) and is reflective of what Comcast spokeswoman Jenni Moyer described as a year of behind-the-scenes work that started when Bill Stemper joined as president of Comcast’s business services group. Already successful "He came in to look at how we could expand the already successful commercial types of Internet service we provided for small businesses," said Moyer. "He spent the last year putting infrastructure in place, hiring the right sales people and technicians and working with companies like Microsoft to get them integrated into our network."

It wouldn’t hurt to mention that Microsoft has, in the past, invested at least $1 billion into Comcast, but that’s probably immaterial here. What’s material is that Comcast has moved into the mix with a group of aggressive telcos chasing what was once a forgotten space: the SMB that wants what the bigger commercial customers get.
 
"Initially, Comcast is offering enterprise-type email with shared calendar and meeting schedule capabilities and document collaboration … a shared work-type environment using our SharePoint product," O’Hara said. "You can add voice capabilities if you bring in a hosted feature server, which gives you a communications bundle."

That, though, may be something in the more distant future. The more immediate future will include a video offering similar to the residential triple play, Moyer said.

"A lot of the small businesses that are in our area (estimated at between 4.5 million and 5 million) have maybe a break room for their employees or a waiting room" where a video service would be located, she said.

Comcast will pay "a very low price" for the core software to operate the service and then share revenue monthly with Microsoft. While the company’s current 250,000 (as of the end of 2006) customer base is a drop in the bucket compared to some other Microsoft customers, it still gives O’Hara reason to be enthused about the MSO’s move.

"This is a big cable company taking this offer out and putting a lot of wind behind it," he said. "It’s a big player taking it to the market."

So, for those who were wondering what Comcast’s been up to while the SMB space heated up, here’s the answer: "We’re working with Microsoft to bring those small business owners the collaboration and productivity tools that they want, and we’re becoming a mini-IT department for them because it’s hosted on our network," as Moyer put it. – Jim Barthold