Cisco is targeting the SMB segments that are looking for high value and high feature sets, he said. Cisco breaks the market into four tiers: enterprise adopters, or small businesses that behave like enterprises; cutting-edge adopters that value technology and use it as a strategic advantage; value-price adopters that use technology but are driven by price; and "laggers," companies that adopt technology late in the cycle because they have to remain competitive.

According to research from AMI Partners, the 470,000 enterprise-type companies that comprise the first group account for about 45 percent of annual IT spending by SMBs; the 1.3 million companies in the second group, the cutting-edge adopters, represent about 31 percent of the money spent; the 1.8 million price-driven companies in the third group account for 16 percent of the market; and the 3.6 million companies in the latecomers group represent just 8 percent of the market.

Cisco's SMB offerings will be targeted at the first two groups, Mountford said, while Linksys is aimed at the third.

"We can talk about a 20-seat company, and we have, but what really matters is what tier that company falls into," Mountford said. "A 20-person financial services firm will require more sophisticated technology than a car wash with 200 people."