Careers at NETGEAR
Netgear’s mission is to be the innovative leader in connecting the world to the Internet.
Netgear is a company that manufactures networking products, with a focus on wireless devices that create Wi-Fi networks. The company operates three main business segments based on geography: the Americas, EMEA (Europe, Middle East and Africa), and Asia-Pacific.
Patrick Lo got the inspiration for Netgear from observing his family. After dinner in his house, each person would hurry over to one of the residence’s three computers, desperate to gain control of the single dial-up connection to the Internet. He assumed that other households faced the same problem, and believed there had to be a solution – namely, a way to connect several computers to a single Internet account. Luckily, he worked in management at Bay Networks, a company that provided networking equipment to large firms. Lo began trying to sell leadership on his idea.
The specific proposal was taking the technology used for its corporate clients and adapting it so that it could be inexpensive and easy to install in home networks. Enough people bought his pitch so that Netgear was launched in 1996 as a subsidiary. It was set up this way rather than as a new product line because his bosses did not believe profit margins would match that of existing lines. The target audiences were small businesses and homes, collectively referred to as the Small Office/Home Office (SOHO) market. The unit offered 10 products: five 10BaseT hubs, two Fast Ethernet hubs, two Fast Ethernet switches, and an ISDN router with a terminal adaptor.
Lo was concerned about how big the market would actually be for the new offering, but did not have to wait long for his answer. The late 1990s saw the rise and heavy penetration of wireless technology and high-speed, broadband Internet connections in the consumer space. However, a new worry arose as bigger rivals quickly seized on the category and began competing sharply on price, generating strong volume sales. Lo responded by emphasizing frequent new product launches to gain the attention of customers. He was able to accomplish this objective by purchasing off-the-shelf hardware and software and contracting with third parties to manufacture the items designed by Netgear; both strategies saved time and expenses.
Netgear and the home networking sector as a whole experienced explosive growth. In 1998 Bay Networks sold the firm to Nortel Networks, a Canadian corporation that was one of the top telecommunications equipment makers at the time. Netgear became a wholly-owned subsidiary, with Lo as its CEO. This lasted until 2000, when Nortel spun off the company and Netgear began planning an IPO. The firm believed that its full range of networking products would be attractive to investors. Under normal circumstances it would have been, but his bid came at the worst possible time, as the period saw the collapse of the dot-com bubble and the decline of market conditions.
Despite this setback, Lo was not deterred. In 2003 he attempted to go public again; the timing was still not great as it occurred during the slowest period of IPO activity since 1975. That said, this time Netgear had even more to offer – wired and wireless products, including routers, hubs, switches, adapters, access points, and print servers. The offering was completed by July, raising $98 million and generating bids from 18 underwriters. Today Netgear is one of the top networking equipment companies in the world, generating over $1 billion in annual revenues.
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Benefits at NETGEAR
Business model of NETGEAR
Netgear has a segmented business model, with customers who have slightly different needs and problems. Its three customer segments are as follows:
- Retail Business Unit: Focuses on individual consumers, offering home networking, home security automation, and storage products.
- Commercial Business Unit: Focuses on small and medium-sized businesses, offering business networking, storage, and security solutions.
- Service Provider Business Unit: Focuses on service providers, offering made-to-order home networking hardware and software solutions, in addition to 4G LTE hotspots for providers to sell to their subscribers.
Netgear offers three primary value propositions: brand/status, accessibility, and customization.
The company has a well-known brand, having been in existence since 1996 and maintaining a large global footprint of 27,000 retail locations in 26 countries.
Beyond being broadly available, it also sells its products through a wide variety of channels, making them more accessible to customers who might have difficulty finding or obtaining the items; these range from regular retail stores to direct market resellers.
Finally, Netgear’s offerings are sold in multiple configurations to accomodate the preferences of end-users in its various geographic areas of operation. This customization makes its products easy to use regardless of audience and thus more widely appealing.
The majority of Netgear’s sales come through wholesale distributors and traditional retail. Its other distribution channels are online retail through its website, direct market resellers, value-added resellers, and broadband service providers.
Netgear’s customer relationship is primarily of a personal assistance nature. Its strong customer service operation provides assistance in a variety of formats including phone, chat, and e-mail. That said, there is also a self-service component as customers can obtain answers through its website, as well as a community component in the form of a user forum on the site.
Netgear’s key activities focus on production. The company’s business model entails designing and developing its various lines of products.
Actual manufacturing of products is outsourced to other firms, all of which are headquartered in Taiwan. These firms are: Cameo Communications Inc., Delta Networks Incorporated, Hon Hai Precision Industry Co., Ltd. (more commonly known as Foxconn Corporation), Sercomm Corporation, Pegatron Corporation, and Wistron New Web Corporation.
Netgear maintains a key partnership with original equipment manufacturer (OEM) suppliers. The company purchases products from firms who have offerings matching its design requirements. In certain situations it may request the supplier make modifications.
Another important partnership is with third-party companies to whom it outsources its warehousing, distribution logistics, and order fulfillment. These parties also oversee certain aspects of product configuration and repackaging, such as the insertion of relevant documentation and the addition of power adapters. There are four main providers, which are as follows:
- APL Logistics Americas, Ltd. in City of Industry, California serves the Americas region
- Kerry Logistics Ltd. in Hong Kong serves the Asia-Pacific region
- DSV Solutions B.V. Netherlands serves the EMEA region
- Agility Logistics Pty Ltd. in Matraville, NSW, Australia serves Australia and New Zealand
Netgear’s primary resource is its intellectual property, which largely consists of over 22 issued U.S. patents and 18 foreign patents as of 2016. It also includes the company’s access to hardware and software license rights and trade secret rights for its products.
Netgear also relies heavily on a variety of human resources. They are as follows:
- Research and Development Staff: Netgear’s key resources align with its main R&D processes. Under its in-house development process, it relies on its engineering team to design and develop one or more of a products’ subsystems. Under its original design manufacturer (ODM) process, it utilizes its technology suppliers to develop products its engineering team has designed.
- Sales and Marketing Staff: Another important resource is the company’s sales and marketing team, which includes over 300 employees. Staff members work directly with customers on activities such as co-advertising and sales associate training.
- Customer Service Staff: Netgear relies on its customer support team to address customers’ questions and concerns. It is comprised of permanent employees and outsourced subcontractors.
Netgear has a value-driven structure, emphasizing quality and highly personalized service. The company’s top cost driver is a variable cost, cost of revenue, which includes cost of goods sold (hardware from suppliers, etc.). Other major costs include sales and marketing (fixed), research and development expenses (fixed), and general and administrative expenses (fixed).
Netgear has one revenue stream: sales of its products. While it does not divide products into reportable segments, product categories include networking, smart home security, wireless, switches, network storage, security, telco, cable, mobile, and home monitoring and automation.
info: Patrick earned a B.S. in electrical engineering from Brown University. Prior to starting Netgear he worked at Hewlett-Packard, serving in various management roles in sales, marketing, product management, and technical support.
info: Christine earned a B.A. in Accounting from the University of Texas at El Paso, and an M.S. in Taxation from Golden Gate University. She previously worked at Aspect Communications and Tandem Computers, and worked in public accounting for eight years.
info: Mark held several prior roles at Netgear, including SVP of Advanced Engineering, VP of Engineering, and Director of Engineering. He guides emerging market efforts and works to ensure the technical leadership of its networking products.
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