Comcast's Big Idea To Go After Small Business
Comcast's stock has been hammered over the past year--down 20 percent. The company's facing new competition from telecom and satellite TV companies, a cratering home sales market, and bad news from its consumer business, which signs up--or upgrades--customers when they buy new homes. As part of CEO Brian Roberts' ongoing plan to turn around that stock, Comcast has a new strategy.
This month Comcast is set to unveil its new "Business Class" --a bundle of the broadband services targeting the six million small and medium sized U.S. businesses. Offering more bandwidth and better phone options, it's also partnering with Microsoft to offer a full small business package, including web-based software. (Web based means the small business owners don't need to buy additional storage).
Thinking small is a big change for Comcast. Right now this market generates only one percent of its revenue. And unlike the mature and increasingly competitive consumer market, this could be a fast-growing business for Comcast. The company aims for $2.5 billion in revenues from this new division by 2011, by offering more bandwidth for more affordable prices.
Telecom companies, like Verizon , already serve this small business market, as do Comcast's cable industry competitors. Cox, which has been in the business for fifteen years, has the biggest base: ten to fifteen percent of its revenues (the company is private) come from these commercial services.
Cox tells me they're not worried about Comcast entering the field, there's plenty of room to grow. This business has the potential to be really profitable for both companies. One benefit of serving businesses: companies can leverage their existing residential networks when people are off at work and school, squeezing more profit from the companies' existing infrastructure.
A note--large cable companies rarely overlap with each other, they tend to be regionally oriented. Cable companies that don't overlap geographically often collaborate to compete against the phone and satellite TV companies.
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