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We've heard a little bit about how the two channel models [Cisco and Tandberg] will eventually converge, in about nine months time. Many Tandberg partners that don't also work with Cisco are concerned that with more exposure for the Tandberg portfolio, there's going to be unavoidable margin pressure. What do you tell them?
It'd be silly for us to destroy a Tandberg business model that's brought partner profitability. We have put in place very disciplined processes to ensure we don't disrupt that. We do have two different channel business models. We discount deeper versus Tandberg and our list pricing is higher, so what we're going to do is, if someone brings us a deal and pushes us for a Cisco-like discount on a Tandberg [product], the answer is going to be no. The net price for Tandberg is not going to change.
We're not going to over-distribute, either. We have now about 90 Cisco TelePresence partners, and Tandberg had 1,600 partners. About 50 Cisco TelePresence partners were Tandberg already, so we're only adding a net of about 40 additional partners. I'm not saying we won't add any additional partners but if we do it will be on a carefully selected basis.
OK, so for partners who are selected, is there a process in place for picking them? Is it folks specialized in UC? Service providers?
It could be all of the above, though I think UC partners would be the natural. But video is a very different animal than voice. It's very important that we attract the right partners with the right mindset. Our focus is not going to be growing the overall number of partners, but rather to invest in the partners we have to make them really successful. If we have a region in the world where we don't have enough coverage, we will recruit. But Tandberg operated globally and so does Cisco, so there aren't a whole lot of gaps to fill. We feel over the next year we have more than sufficient capacity to absorb the demand we've seen.
We heard at Partner Summit that Cisco will be introducing a specialization for video. Can you talk about what that will entail?
It's going to center around the broader video play and include the combined portfolio of TelePresence and Tandberg. We want people to start thinking more holistically about video and break down the silos. That's where we think the biggest value for customers will lie.
Will Cisco look to make additional acquisitions in video? I mean, you're always on the lookout, right, but is that a priority right now?
We're always on the lookout. Obviously I can't comment on anything that hasn't been announced, but as you know, that's all part of our model, so if we have a gap, we will look to either build or acquire and make the best decision for the business at the time. There's nothing that's a burning priority for us at this time. We've got a pretty big bite to swallow right now.
Anything else you can tell me about home telepresence at the moment?
We are in trials, and you will hear more during John [Chambers'] keynote [Thursday]. All we can say is we're very excited about it. It's going to be a home run product for us, I think, and will tie directly into our strategy. I can't wait for Christmas to come.
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