Cradlepoint Pivots To Subscription-Based, Software-First Sales Model, Says Partners Will Now Have Closer Ties To The Customer Journey

Cradlepoint revamped its product set to focus on subscription-based, software-first deals and pre-packaged solutions the company said can offer significant savings to customers and healthy, predictable margins to partners.

The new SD-WAN-based strategy organizes Cradlepoint's hardware and software offerings into three set categories – branch offices, mobile and the Internet of Things – under the NetCloud name, and the company estimates that the all-in-one solutions can save customers between 6 percent and 33 percent compared with assembling hardware and software products piece by piece.

"This is an opportunity for partners. They can speak to the value and gain additional margin points. It's a great opportunity for the channel to shine," said Robert Auci, vice president of global channel marketing at Cradlepoint. "It's a move away from selling hardware," Auci said. "It's about upselling to software features. We had a lot of commentary back from customers and partners that said that the Rubik's Cube of different possibilities from our catalog was just a little bit too daunting."

[Related: Cradlepoint To Expand Channel Programs, Partner Incentives With New $89 Million Funding Round]

Cradlepoint began piloting the new product and sales strategy through partners in the fourth quarter, and Auci said the effort was "hugely successful." Partners, he said, get "better alignment with the right solutions and ability to demo, price and propose solutions quickly and place, deliver orders faster and have better, more predictable recurring revenue. It allows them at the end of the day to participate more closely in the customer's journey over the lifetime of the solution and not just the time of selling the hardware component.

"They like it because it includes the SD-WAN component," Auci said. "Even if they had customers that didn't turn it on from the get-go, they had the ability to have future conversations. As customers began to explore the hardware and ran into challenges, the partner was able to say, 'You already have that functionality and capability embedded, you just haven't turned it on.' That's a great conversation for the partner and the customer. User satisfaction goes way up once they start using some of the functionality."

The first to be available is the NetCloud offering for branch offices. The offering provides 4G LTE optimized SD-WAN with extended wireless LAN for small retail and other branch offices.

The new offerings are intended to offer flexibility beyond what customers would get by assembling things themselves. NetCloud offerings are available in one-, three- and five-year terms and include edge routing, security and cloud management customized for each market segment. Customers have a choice of endpoint hardware, as well as integrated 4G LTE modems and 24/7 support.

The strategy also allows customers to buy advanced software features on one-, three- and five-year terms. Cradlepoint launched its first new products in the NetCloud line – the AER2200 Edge Router and AP22 access point – Tuesday at the National Retail Federation conference in New York. The offerings boast "zero-touch" provisioning, monitoring, network analytics, management and security, according to the Boise, Idaho-based company.

"It has to do with changing customer buying preferences," Auci said. "Customers say, 'Can you offer me more service-oriented solutions, not just hardware? Can you help us out with best practices? Don't leave it up to us to figure that out. Can you help us with ROI, not just at the time of purchase, but through the whole length of the deployment?'"

Peter Dunn, consulting director at Orbcomm, a New Jersey-based solution provider that works with Cradlepoint, said the new strategy could give Cradlepoint an edge in the market.

"One of the real driving forces behind their success is the software," Orbcomm's Dunn said. "They've always pushed the software side of things, but you always had to buy so many different SKUs. This simplifies things. The pricing has become very aggressive, and I think it's really going to help drive our router business."

"Customers would say, 'I just need the router,' but eventually they'd realize they needed the software, and they'd come back to us," Dunn said. "I think it's going to give Cisco a run for their money. We see this giving them a tremendous edge in the market. Everyone has launched a remote management solution and is pushing toward software-defined, and unless someone looking for extremely low-cost options or at Cisco, no one comes close."