What makes someone think, “You know what would be a prime market to get into? Making discount network equipment and keyboards and competing on price!”?

If we look at just the big players, the companies that anyone who’s ever walked down the networking aisle at Best Buy could name, I come up with HP, Cisco, Linksys, D-Link, Netgear, SMC, and Belkin. Seven companies. The latter two maybe don’t enjoy the same stellar reputation, but they seem to sell plenty of quality equipment nonetheless. Quite a few of those companies are multi-billion-dollar firms that comprise the S&P 500. They’re huge, and they’ve got to sell enormous quantities of equipment every year. Have you ever tried to buy a 4-port switch? It’s a line of reputable companies all trying to undercut each other. You can get a switch for under $10 if you shop around. From a well-known, trusted brand. It’s a fiercely-competitive market.

So it boggles my mind that anyone would think it was a good market to enter. It’d be like decided to start a fast-food burger joint that would go head-to-head with Burger King and McDonald’s. It’s suicide. For one, both companies consider their brand’s recognition to be worth an asset worth more money than you or I will ever see. Unphased, you decide to name your company something in a foreign language that most Americans are unsure how to pronounce.

Of course, Burger King and McDonald’s aren’t exactly known for wholesome, nutritious meals. So there’s a big (and growing!) market for things like organic, or at least real, food. So if your company that no one can pronounce decided to make organic, healthy hamburgers, you might have a minuscule chance of doing well. But instead, for some strange reason, you decide that the way to go about competing with the titans it to undercut them on price. Yes, yes, both of them have the equivalent of the Dollar Menu, and yes, both of them have unimaginable economies of scale to allow them to sell prepared bacon cheeseburgers for what someone working minimum wage would earn in under 10 minutes.

Even though you don’t have their economies of scale or name recognition, you decide to undercut them on already-frighteningly-cheap products. After a short run, your name becomes synonymous with “cheap crap,” and no one with tastebuds will buy your stuff. The food is terrible, the menu is in broken English, and the place smells of rotting sewage.

I don’t get it. Getting into an overcrowded, over-competitive industry like this is the business equivalent of suicide. And yet there’ve got to be at least a hundred different firms marketing their consumer networking equipment in the US.

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