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The Cisco Machine
Is there pressure on VARs from Cisco to sell Cisco products and solution sets exclusively or near-exclusively?
“Ha. Does a bear ... er, well, is the sky blue?” said one incredulous Cisco Gold partner who asked that his name not be used in print. Thinking about his answer a bit more, the longtime VAR paused and posed it another way. “Well, there’s always pressure. This is the Cisco machine we’re talking about, and they’ve always been high on making sure you’re doing what [they need you] to do to keep the beast full,” the VAR said. “But I’m not sure I could point you to any specific instances. We’ve had a good year with Cisco and I doubt the pressure is any worse for us than anybody else. Not this year, anyway, with so much else happening. They’ve put the brakes on some of the pressure stuff.”
The past year in the networking space has been framed by big acquisitions -- Cisco-Tandberg, Avaya-Nortel, HP-3Com -- and a bigger rivalry, that of HP and Cisco, which has been full-on in the channel since at least the 2009 Cisco Partner Summit in Boston. It was there where Cisco North American channel chief Wendy Bahr declared, “We are competing with HP. Period. End. It is competition.” At the time, many VARs that sold both HP and Cisco feared that price wars and pressure would bleed the channel dry in the interests of clashing vendor titans.
HP certainly didn’t dial down the rhetoric on the neworking side in 2010. At its HP Americas Partner Conference in Las Vegas in April, many HP executives rallied the VAR troops in favor of giving Cisco its fiercest competition in years, thanks to HP’s stepped-up focus on networking and its acquisition of 3Com.
At the Cisco Partner Summit last month, however, a different mood pervaded. Gone were the brash, bully pulpit declarations of war against HP, and instead came a calmer tone of thanks and a gentler urging of partner loyalty.
“There was a lot of backlash that came from Cisco saying ‘game on’ last year,” said Peter Belyea, vice president of Teracai, an East Syracuse, N.Y.-based solution provider, in an interview at the Summit. “I think now they realized that they don’t have play like that. They can set the strategy and focus on what’s important.”
Cisco Chairman and CEO John Chambers told reporters at the Partner Summit that Cisco “doesn’t focus on other companies. We focus on market transitions.” Bahr acknowledged to CRN that the 2009 Summit was loaded with anti-HP sentiment, but that Partner Summit 2010 was about “market transitions” and that Cisco was “so busy with its partners, and that’s what it’s all about.”
Keith Goodwin, Cisco senior vice president for worldwide channels, said earlier this year that the company’s current philosophy is to earn partner loyalty. “The key word there is ‘earn.’ We’re not there demanding it, we’re not there focused on ‘you have to be loyal,’ it’s about earning it,” Goodwin said. “Our view of how data centers virtualize going forward has the network in the center. HP has a different view of that. We want to share in a compelling way with our partners and inspire them to invest in our vision.”
In discussions since, executives from both Cisco and HP have publicly downplayed any notion of pressure on VARs to choose one or the other.
“We like people to sell HP solutions, and we will incent them to do so,” said HP Networking Senior Vice President and General Manager Marius Haas in a May discussion with CRN. “But we’re not going to say, ‘You need to do one or the other.’ We’re not asking for that. We believe that the market will choose and I think the partner community will follow what the market looks for.”
Some of HP’s competitive promotions, however, have been more aggressive than Cisco’s. HP’s ProCurve unit, now part of HP Networking, launched a promotion in October 2009 called ProCurve Accelerated training to lure Cisco VARs to ProCurve with the promise of fast-tracked certifications for HP networking based on the Cisco certifications they held. “Double your knowledge without shrinking your wallet,” read the promotion, which HP touted as saving partners $12,000 over what they’d pay in ProCurve training if they didn’t hold qualifying Cisco certifications.
Andrew Cadwell, vice president of sales at INX, a Houston-based solution provider, said that INX’s loyalty to a few strategic vendors -- such as Cisco and NetApp -- has helped it stay out of HP vs. Cisco-related vendor loyalty skirmishes. “We don’t have that same pressure as some of our similar-sized competitors. We sell platforms, such as with Cisco, VMware and NetApp, and we don’t substitute HP,” Cadwell said. “But I’m not saying it’s not out there. I’ve heard it’s out there.”
Most recently, Cisco has had other issues to worry about than HP, namely its own supply chain shortages that, according to Cadwell, have affected much of the bread-and-butter routing and switching Cisco business and especially product lines like Nexus, which are crucial to Cisco-led data center deployments.
Things have loosened up and Cisco representatives have been helpful to INX, Cadwell said, but the fact that Cisco’s top executives didn’t make definitive public statements about the scope of the supply chain issues while they were happening meant “we didn’t have anything we could point customers to to set expectations.”
It’s been less severe for other Cisco VARs.
Ryan Halper, president of Seattle-based Cynnex Networks, and several other partners said a few recent Cisco programs have been good at inspiring loyalty without forcing it. The one initiative many Cisco VARs pointed to was Cisco’s three-year, zero-percent financing program, which was unveiled in January 2010. “It gives us an advantage,” Halper said. “I think we still have to win in the traditional sales process, but it does let us close deals faster.”
But don’t think for a second that the rivalry between the two vendors doesn’t run deep, VARs said. Adam Steinhoff, president and CEO of Steinhoff Consulting, North Palm Beach, Fla., who has de-emphasized his Cisco business in favor of cheaper alternatives, said he feels it in even small deals. “I have to admit that I brought that point to them about six months ago, and if I mention HP, magic happens,” said Steinhoff, describing discussions with Cisco executives. “What I’d prefer is let’s not jump through hoops every time. I shouldn’t have to go and get a price deviation every time I need a product.”
Dan Serpico, president of FusionStorm, Pasadena, Calif., said he hasn’t seen any more aggression than usual from Cisco or HP, both of which FusionStorm partners with. “There is a race here among these technology companies to own as much of the data center spend,” he said. “But I don’t think that is any different than it was five years ago when there wasn’t yet a cloud to slice up. Cisco provides great technology and meaningful partner relationships for us. For HP, it’s also true. It’s also true of IBM and others we partner with.” —Chad Berndtson
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