Cisco Partner Survey: Data Center Hot, WAN Op Not (And Other Interesting Findings)

Survey Says ...

Baird Equity Research this week released survey results from Cisco partners big and small to gauge the health of their Cisco businesses and to hear first-hand what's selling hot and what's, well, not.

Baird said its survey results are based on the responses of 81 Cisco resellers around the world that combined represent $10 billion in Cisco annual sales. The solution providers varied in size and geography, and 51 percent of them were Cisco Gold partners.

Ranging from partners' hottest-selling Cisco products, to the initial feedback they're hearing around Cisco's SDN push, here are 10 key take-aways from Baird's findings.

A Slow Start To Q3

Of the 81 Cisco partners to take Baird's survey, one-third of them said their Cisco sales fell short of their expectations in Cisco's third fiscal quarter, ending this month. Forty-one percent of partners, meanwhile, said their sales for the quarter were in line with expectations, while the minority, 26 percent, said they exceeded expectations.

Baird said partners attributed the sluggish quarter to weaker-than-expected sales in certain Cisco product lines, such as collaboration, where Cisco itself saw sales slide 7 percent year over year in its second fiscal quarter.

Q4 Pipelines Look Strong

While Cisco's third quarter may have been a bumpy one for partners, the fourth quarter, they said, looks strong.

According to Baird's survey results, 44 percent of partners expect to have a "better-than-seasonal" fourth quarter, while 47 percent expect "normal seasonality" and only 9 percent expect the quarter to be "worse-than-seasonal."

Fourth-quarter pipelines for Cisco data center technologies, such as its Unified Computing System (UCS), look especially healthy, partners said.

UCS A Partner Sweet Spot

When it comes to hot Cisco products for partners, UCS is the clear-cut winner, according to Baird's results.

The research firm said that data center switches, such as Cisco's Nexus line, and UCS have for the past six quarters been identified by partners as the Cisco products for which they see the most demand.

Conversely, Cisco WAN optimization was identified by partners as the slowest seller out of 10 total product categories, while the company's edge and core routing products also scored poorly, according to the survey.

Cisco network security, bolstered by its $2.7 billion acquisition of Sourcefire last year, received a middle ranking from partners, moving up from last place in the first quarter.

HP, Juniper Biggest Rivals In Data Center

Regardless of size and geography, the Cisco partners surveyed by Baird said Hewlett-Packard represented Cisco's most "significant competitor" in the data center switching arena.

According to the results, 33 percent of Cisco partners identified HP as the company's biggest threat in the data center, followed by Juniper Networks at 23 percent and Arista Networks at 12 percent.

Dell and white-box switch providers such as Pica8 and Quanta pose the least threat, partners said, coming in at just 4 percent and 3 percent, respectively.

HP Turns Up Heat In Campus Switching

In the campus switching market, HP was cited by partners as the most significant threat to Cisco.

According to the survey, 43 percent of Cisco partners -- again, regardless of size or geography -- said HP is Cisco's most significant competitor in campus switching, followed by Juniper at 20 percent. Brocade was next at 12 percent.

Bill Smeltzer, CTO of Focus Technology Solutions, a Seabrook, N.H.-based Cisco partner, told CRN recently he is definitely starting to see HP win more of Focus Technology's Ethernet switching deals. "The legacy Cisco corporations continue to go with Cisco because they are Cisco across the board," Smeltzer said. "But on net-new greenfield opportunities, we are definitely seeing people not go with Cisco. We are seeing a lot of HP."

In Security, Palo Alto Poses 'Biggest Threat'

The majority of Cisco partners to take the survey -- nearly 40 percent -- said Palo Alto Networks poses the biggest threat to Cisco in the network security market.

"Palo [Alto] is the one with the most attention," said one unnamed Cisco partner to take Baird's survey. "They are the ones that pose the biggest threat as an up-and-comer because it's a platform. We will grow our Cisco security business but Palo [Alto] is laser-focused on this market. We have more than doubled our Palo [Alto] business [year over year]."

After Palo Alto, Check Point Software Technologies was found to be the most significant threat to Cisco's security game, with 18 percent of the votes.

Sourcefire Acquisition Slowly Paying Off

According to Baird's survey, partners expect good things from Cisco's Sourcefire buy -- even if it takes some time.

When asked how Cisco's recent integration of Sourcefire is impacting Sourcefire deals, 31 percent of partners said they saw an increase in deals, while the minority, 12 percent, said they've noticed those deals either slowing or stopping. Fifty-three percent, however, said they aren't seeing an impact just yet.

"Security was their biggest weakness, but with the acquisition of Sourcefire, we feel Cisco finally has a security play and are anxious to see how this will play out," said another anonymous Cisco partner in the survey.

SDN 'Mostly Marketing Hype'

There might be a lot of industry talk around SDN, but for some Cisco partners, that's all it is -- talk.

When asked where most of their clients stand in regard to SDN, the vast majority of VARs, 72 percent, said their customers are "curious" about SDN but are planning to wait before actually deploying the technology. What's more, in Baird's February Cisco VAR survey, 48 percent of partners said SDN has caused "customer confusion."

"SDN is mostly marketing hype," said another unnamed Cisco partner to take the survey. "Moving function from [hardware] into [software] has been the trend for the last 10-plus years, and SDN is just the next step."

Nexus 9000 Adoption Starting Off Slow

The majority of Cisco partners said customer adoption of Cisco's Nexus 9000 switches, a key component of Cisco's Application-Centric Infrastructure (ACI) SDN platform, is taking time to really ramp up.

So what's the hold-up? More than one-third of respondents said customers are waiting for Cisco to launch its APIC controller, another core piece of Cisco's ACI architecture, before pulling the trigger. The second biggest hindrance to Nexus 9000 adoption, partners said, is general customer confusion around SDN, followed by customers saying the Nexus 9000 business case just "isn't compelling yet."

VMware NSX Also Taking Off Slowly

Baird said that in its conversations with Cisco partners taking the survey -- many of which also partner with VMware -- it seems that VMware's NSX platform for SDN, much like Cisco's Nexus 9000, has "yet to gain strong momentum with customers."

"We are seeing clients with a significant VMware investment want to look at NSX as VMware is pushing the solution," said one anonymous VAR in the survey results. "We do find that the NSX go-to-market and channel model is pretty immature."

When adoption does take off, almost all the Cisco partners surveyed -- 90 percent of them, in fact -- said they expect NSX to be deployed on top of existing customer infrastructures or new Cisco gear. Four percent expect NSX to be deployed on HP Networking infrastructures, while no partners said they expect to see deployments on new Arista Networks or white-box switching hardware.