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So when we talk the fundamental difference between what Cisco can offer in switching and what competitors are pushing against your top Catalyst and Nexus products, what to you is the 30-second/1-minute difference as to what Cisco can offer here versus HP and the others that move against you here?
So I know the difference, and I think it falls into three categories. The first difference is we develop our own ASICs, our own processors that support switching and routing fabrics. In doing so, if you look back, the upgrades and investment protection that a Catalyst customer has experienced over time is amazing. The upgradeability to a new switching fabric has been phenomenal because we [put] the concept of investment protection into what we do in switching in routing. That is not the way merchant silicon works, which is the foundation of our competitors' products.
Number two is skill sets. And look, I admit that in some places, all someone wants to do is connectivity, and if that's the case, connectivity is connectivity. Let's not spend a lot of time on that. If a network fabric is intended to deliver services on which the end user, application and device can rely, then let's get real clear: video is a network service that matters, security is a network service that matters, protocols that support VLANs and other abilities to shape traffic on a network matter, both in the campus and in the wide-area. In that regard, the layer of network services and the richness of our software is a differentiation that the other guys don't care about. I'm fine with the way that some parts of the market want to connect a box, connect a switch, a device. What I care about is that network services on top of switching fabrics will continue to evolve and accelerate, especially with the importance of video. I've had three customer meetings this morning, and every single one of those meetings what came up was how video would be deployed to leverage rich collaboration, mobile services and internal collaboration tools. If that's part of the network fabric, there's a network service layer that's different. Cisco does very well in that area.
The third thing that's different is actually the skill sets required internally and externally. There are hundreds of thousands of certified experts on Cisco technology foundational in our partners who create a fabric of skills and expertise in complex deployments and the use of the networks that is second to none. When you bring in somebody's system into your network -- it might be a very small company -- the problem you have is that you are now tied to a person that has the expertise to support that system.
The infrastructure -- the ecosystem of systems and expertise is around Cisco. Think of a switch: three years from now, who's going to be supporting that switch? Is it the same company, the same person? If you look at that underlying capability in this industry, it's a Cisco capability. That's a huge differentiation. The breadth and capabilities and skills associated with the technology. And if you go to the upper levels of complex networks, you do need expert capabilities to deploy services, deploy networks and troubleshoot them when applications and other devices cause an issue.
When we have a conversation about my switch, your switch, it takes people to make these technologies work. Our channel has the people.
For the partners themselves, there's a lot of saber rattling out there on who's going to making partners more profitable. You've got HP touting that they've recruited a large section of the Cisco Gold partner base, we all see the hype out there. By doing more with Cisco, by aligning more closely with Cisco, how is a partner more profitable than if they align in a similar capacity with HP?
You know, I ran my own partner business for 10 years. I wrote the checks. I had to finance the receivables. I did everything that our networking and partners do today. I was responsible for our customers, our outcomes and our capabilities. It's a simple formula: I'd rather sell something for $100 for a certain percentage of margin than something at $60 for the same percentage of margin, because the unit of work I had to deliver with my sales force, with my infrastructure, with my services capabilities, I'd like to maximize that, the gross profit dollar that came from that unit of work. I'm confused as to how you make more money if the value proposition is to sell less dollars at the same margin, or "we'll give you a rebate to make it try to look more." I'm confused, because the last time I checked, more dollars and more margin helps me build a profitable business and helps me get a return on resources that are always scarce and limited. I have limited availability to invest in a sales team, limited availability to run a service practice. We've built the collaborative approach to each of those things. I don't know how selling something at 70 percent of what I was selling at a dollar helps make me more profitable. I'm sorry. Someone's going to have to explain it to me.
Our view is sell value, sell up the value chain, sell the features and capabilities not only for today's requirements but also for the future. Understand how an architecture creates a broader conversation than a point product does. That's in the interest of the overall profitability of the practices our partners run today. Economically, I don't know that there's any other outcome than a unit of work that achieves the highest profit contribution than one in which the margin is based on the highest dollar value.
I don't think there's anyone out there in the partner base that can argue the value of the Cisco architectural approach and [that] the size of the conversations they're having has expanded in the last three years. [Partners] are able to have a two-times bigger conversation on what they're selling than the point product servers, or the point product end-of-rack of point-product top-of-rack switch they sold two years ago. So this is a good thing for profitability. And if you want to go out there and say to people that there's another way to look at it, then I guess, I don't understand it.
NEXT: Cisco's Architectural Selling Motion
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