Dell Receives Walking Papers From Cisco

Cisco released a statement to CRN last week saying Dell could sell Cisco products through the end of October in order to ensure a smooth customer transition. Beyond that, Cisco declined to comment.

Dell executives also declined to comment, but a spokeswoman said the company continues to provide networking equipment from Extreme Networks, Nortel Networks and Enterasys Networks, as well as its own PowerConnect-branded line.

Industry sources say the more than 5-year-long relationship is ending because Dell is ramping up its own line of networking products, and because Dell doesn't fit in with Cisco's value-added channel model, which requires technology specializations.

While many Cisco solution provider partners said they rarely ran up against Dell in the market, they still praised the move.

"It's not a big deal for us," said Robert Keblusek, vice president of business development at Sentinel Technologies, Downers Grove, Ill. "If someone is looking to buy from Dell, they're not looking for a solution. They're looking for a switch at the lowest possible price, and that's not our business."

Still, anything that diminishes Dell's power is a good thing, Keblusek said.

Dell began selling its own Layer 2 switches in September 2001. The Cisco-Dell relationship soured when Dell disclosed plans this June to sell its own Layer 3 switches, stepping up competition with Cisco, the sources said.

The move comes on the heels of Dell's deauthorization to resell Hewlett-Packard printers. In July, HP said it would terminate its printer and imaging products agreement with Dell because Dell intends to sell its own branded printers.

"[The Cisco termination is not terribly surprising, given what happened with Dell and HP," said Brian Alexander, an analyst at Raymond James and Associates. "The way I see it, Dell is increasingly competing with its suppliers. If that's what's driving a wedge between the two, that's understandable."

Dell can continue to source Cisco products through distribution to use in its own systems. It buys Aironet wireless LAN NICs through Ingram Micro, sources said.

Dell told analysts that its PowerConnect sales are ramping nicely but did not quantify those sales, Alexander said. The Cisco severance is unlikely to have a major impact, he said.

"Dell's total peripherals business is about 12 percent of sales. It would be hard to project how much of that is Cisco," Alexander said. "The financial impact is not significant to Cisco either because it will be replaced by other resellers. It's a mild positive for distributors and resellers."