CRN: Three years from now do you think the percentage of partners who are doing 70 percent or more of your product will be greater, and how much greater will that be? How do you see that needle moving over the next three years given the pressures that we're seeing in the market?
Chavez: I wouldn't put a number to it, but I do see that the partners in our Platinum partners that sell the breadth of our portfolio are the ones that are exhibiting the most growth right now from an HP perspective. It's double-digit growth and we're seeing that this year, and we expect that to continue to grow over the next three years.
Peres: I think the majority of the partners that see the most value with Cisco are the ones that see the value on the breadth of what we sell vs. an individual point product.
Vitagliano: At the end of the day, the way we look at it is we want to be strategic with as many partners as we can. If I only have 35 [percent] to 40 percent of the partner's business, I'm not strategic -- I'm a line card.
CRN: One of the levers to get partners to sell more was always that you just get a better discount if you sell higher volumes. Has that changed today? Do partners need more certifications across a bigger set of the product line, which shows that they're willing to sell more of what you have?
Vitagliano: Just because I look like I'm from the '70s or '80s, do you think we have to have a '70s or '80 model in place?
Because that's what that is. The whole idea of just stacking on better rebates and more on the back end, I don't think that scales. I really don't. I think for those of us that have tried it know it's a race to the end. I think what it's about is becoming more strategic. And what I mean by that is, for example, we outsource a lot of our services. So when I go to one of my partners and I use them as an outsourced service provider like for us, we become more strategic. They don't necessarily, as part of that services transaction, generate any more hardware revenue for us. But they're becoming more strategic with us, becoming more dependent upon us. You're getting a much deeper, strong relationship.
So I think it's those types of things that will continue. Now at the end of the day, make no mistake, they've still got to make a return on the investment and the ones in this room that are more profitable for them will always be at the top of the list. But that profitability piece includes a lot of stuff, ease of doing business, how are your direct guys to engage with? How can I work with you? All that factors into it. At the end of the day, they develop a profitability view and you're either at the top of the stack or you're not. So I think a lot of it is that. It's not just about the rebates and the price, but that's a piece of it.
Rauch: First of all, you're not going to twist arms to be able to get there. And going back to Frank's comments, you're not going to be able to buy it either; you're really not. There's no margin program in the world that says, 'Hey, you're going to sell this monolithic [product] stack.' It's been tried before. It's kind of the old news. What you need to do is be able to make it easy for partners and make it intuitive [for them to expand their business with you].
Peres: We don't use volume at all as a condition to any discount that we sell. We're value-oriented and the value starts with what we call specializations. It's like degrees. Within that specialization we not only have the condition of technology competency, but also services competency. So what we've done is we've added professional services as part of the foundation of those specializations. The more specializations you have, then the more of a certified relationship you can have with Cisco and, the higher the certification level, the more discount you get, but it's not volume-oriented. It's based on how many degrees you have or how many specializations or how broad you are in your commitment to Cisco. And we're going to continue to evolve the program to be that way and add more and more content both in applications as well as in services.
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