ARC Preview: The Struggle To Win

Chuck Robbins is frustrated. The vice president of U.S. channel sales wonders why Cisco, which controls upward of 80 percent of the U.S. market for core routers and switches, didn't fare better in VARBusiness' 2005 Annual Report Card (ARC) partner-satisfaction study in its area of expertise--data-networking infrastructure equipment. "How can it be that we have the dominant market share, but not the highest level of partner satisfaction?" Robbins asks.

Cisco did, however, fare well in key emerging areas of technology, namely voice-networking infrastructure equipment, wireless LANs and security-management software. But the company that took home top honors in the category where Cisco typically dominates was Hewlett-Packard for its ProCurve line. Solution providers who participated in this year's study said their satisfaction with HP's ProCurve data-networking wares was higher than that of partners who sell Cisco's product line.

Robbins is not alone. This year, several leading companies lost the category in which they dominate from a market-share perspective. That includes organizations that fared well in other product categories where their market share isn't so commanding. HP, Microsoft and Oracle, for example, lost in their core categories but picked up wins elsewhere in the study, which measures partner satisfaction in several areas of expertise, including technical innovation, support and partnership.

Microsoft, more specifically, lost to Novell in the category of Server Operating Systems, but picked up wins in Data Management Software and Web Infrastructure & Integration Software. Oracle lost in Data Management Software, but won for Business Software. HP lost in Network Color Laser Printers, but won honors in Entry-Level Servers (in a tie with IBM), Network Storage and the aforementioned category, Networking Infrastructure/Data Networking.

Then there were those market leaders that fell down altogether. That includes former ARC winners Symantec and Dell. Another company that went home empty-handed in 2005 despite dominating its product category in terms of market share was EMC.

So, why do market-share leaders struggle with partner satisfaction in the categories for which they are best known? For starters, the expectations of a market-share leader are vastly different than those of an upstart. Clearly, up-and-coming vendors with smaller partner bases have certain advantages when it comes to managing a partner program--for one, managing channel conflict among fewer partners. To wit, one of Cisco's toughest challenges is fostering a healthy partner ecosystem in which tens of thousands of partners of different sizes, technical capabilities and geographic reaches can, nonetheless, carve out a distinction and find a way to make a profit with its vast product line.

The same holds true for HP, which lost to Xerox in the Network Color Laser Printer category. In fact, Gary Gilliam, vice president of North American channel operations at Xerox, says one reason his company's partners rated it best-in-class for the fourth consecutive year is because of its simple, unfettered message: "We don't sell through retail and undercut you. That, combined with a world-class product line, has helped us with [the] ARC network-color laser category every year."

Cisco's Robbins, a former Division I collegiate athlete, says his competitive juices are flowing like never before. "I see the challenges that a leader has and understand that expectations are high," he says. "But we have no intention of conceding anything. That's just never gonna happen."