Cisco Boosts Sales Incentives On Switches And Routers
The new "Reigniting The Core" initiative provides deal registration and network assessment funds aimed at improving partner profitability on switching and routing sales, which typically have been less lucrative for solution providers than Cisco's advanced technology solutions.
Cisco Vice President of U.S. Channels Chuck Robbins told 300 plus partners at Ingram Micro's VentureTech conference that the new program, which went into effect this week, represents a stepped up push to improve the profitability for partners on Cisco's bread and butter core switching and routing technologies.
Robbins told Cisco partners the company's pendulum had swung a little too far to the technology specializations like VoIP and security and now is swinging back to switching and routing.
Under the new switching and routing deal registration program, partners can register lucrative infrastructure deals and obtain an extra up-front discount on those deals. Previously, the deal registration program was limited to advanced technology sales.
Under The Network Assessment portion of the program, Cisco will provide partners with network assessment funding for specific accounts. "We will identify those accounts with them up front and we'll offset their costs for doing any infrastructure assessment," Robbins said. In addition, Cisco is offering trade-in incentives under an existing program.
"Routing and switching still represents 70 percent of our business, and we wanted to make sure we're driving growth in our core technologies, Robbins said. "Our partners have continued to give us the feedback that they need some of the same profitability initiatives in the core."
The deal registration means partners will be rewarded at a higher level for a new pure core infrastructure refresh opportunity, Robbins said. "This is a very big deal," he said. "If a partner invests their time refreshing a core network perhaps to prepare for a unified communications rollout a year from now, it will have a very significant impact on their gross margin on hardware."
Robbins said the early feedback on the program has been encouraging. He said a webinar earlier this week on the initiative attracted more than 500 streaming hookups.
VentureTech partners said the initiative could have a significant impact on their profitability and may end up cutting into business being captured by Hewlett Packard's ProCurve line.
"This is the right thing for Cisco to do," said John Riddle, president of Information Networking Company, an Irvine, Calif.-based VentureTech member. "They grew up in the switching and routing business. They need to get back to basics to compete with companies hitting grand slams like ProCurve."
Alan McDonald, president and COO of AllConnected, a Simi Valley, Calif solution provider, also praised the new switching and routing initiatives. "They've go to do something," he said. "HP ProCurve is a very compelling solution at a very competitive price."
Richard Pressler, a network consultant for AllConnected, said ProCurve's share is on the rise in his customer base and has eaten into Cisco's core switching and routing products over the last year. "HP has really attacked the market," he said. "You can't ignore them. Their price point is phenomenal."