Cisco Pushes Partners to Drop Rival Brands

As the battle for the small business market -- and the channel partners who cater to it -- heats up, Cisco is trying to knock rival vendors off of its partners' line cards.

Instead of working with value-priced players such as Hewlett-Packard, 3Com, D-Link and Netgear, Cisco wants its partners to add Linksys, its own lower-cost networking line, to their portfolios.

"If Cisco partners are carrying the Cisco brand and a lower-priced brand, we think they should carry the Linksys brand rather than that other brand," said Charlie Giancarlo, Cisco's chief development officer and president of Cisco-Linksys, last week at Cisco Partner Summit 2007 in Las Vegas.

VIDEO: Giancarlo On Cisco Vs. Linksys

At the conference, Cisco blurred the lines between it and its Linksys division by rolling out a VoIP system under the Cisco brand name that targets customers with 16 or fewer users. In the past, Cisco has cut itself off at the 20 user mark, leaving the rest of the small business market to Linksys.

Now, the overlap is intentional. "We are creating overlap. At a certain business size, let's say 15 users, you will be able to choose from either a Linksys solution or a Cisco solution," Giancarlo said. "A Cisco solution will represent a product line that will scale with your company to very large sizes and allow you to integrate with advanced technologies ... The Linksys set of capabilities is one that can be managed simply by a non-technically trained individual. It allows service providers and channel partners to go into businesses that don't have a fine appreciation of technology or don't want very complex technology and yet give them sophisticated pre-packaged applications and environments that meet their needs."

Cisco's hopes of unseating solution providers' partnerships with its rivals and replacing them with Linksys could be a challenge, as its competitors are working to boost their profiles in the channel as well.

ProCurve Networking by HP, for example, expects to add 2,000 U.S. partners to its current base of 3,000 over the next two years, many of which will be focusing on small and medium businesses, said Wenceslao Lado, Americas vice president and general manager for ProCurve.

"We worry always about Cisco, but we count on our channel partners to make business decisions based on what's better for their customers and for their business," Lado said, adding that ProCurve provides more flexibility to its solution providers. "A fundamental part of our channel program is to identify how we can work within our partner's business model ... It is not our value proposition to say our partners need to be in this sector or that type of account or work with those value vendors. We're more the contrary."

Another challenge Cisco faces is a battle of perception, as many of its partners view Linksys as a consumer play.

"There's no particular reason we're not working with Linksys. They're probably just not on the radar for us," said Pat Grillo, president of Atrion Communications Resources, a solution provider in Branchburg, N.J., that carries networking products from Cisco and Extreme Networks. "I look at them when I need to set up remote access from my home," Grillo said, noting that about 20 percent of Atrion's sales come from the small business market.

Customers themselves have a similar perception, said Reza Zarafshar, president and CEO of Advanced Computer Concepts, a solution provider in McLean, Va., that does 25 percent to 35 percent of its business in small and medium-sized customers. ACC counts Cisco as the networking vendor it does the most business with but also carries Hewlett-Packard's ProCurve gear and signed on with Netgear three months ago.

"We're not against Linksys, but the impression the market has about Linksys is that they're more of a SOHO provider than for business," Zarafshar said. "They have plenty of products that fit well in the SMB space, but they're not seen that way."

ACC looked at the Linksys portfolio before adding Netgear to its lineup but found an opportunity for a closer partnership with Netgear. "Netgear seemed to demonstrate a lot of interest in working with the channel and doing out-of-the-box thinking to create opportunities for us," Zarafshar said. He signed on under Netgear's recently revamped PowerShift Partner Program, which added new partner levels, financial incentives and sales/marketing support.

"They would have to be willing to work with us a lot more than they are," Zarafshar said on what it would take for ACC to begin carrying Linksys products. "It appears that the attitude is that they are part of Cisco and Cisco sells itself, so they don't need to work very hard to sell Linksys, like Linksys is in the same boat, which they're not."

Other solution providers said they want to see more clarity from Cisco on how it's positioning Linksys and how Cisco partners should work with Linksys products.

"I think Cisco's pretty confused about Linksys," said one Cisco partner in a recent interview, who asked not to be identified. While Linksys is trying to promote its own business-class portfolio, Cisco executives and field sales reps are steering Cisco partners away from the product line, the partner said. "If you're aligned with the [Cisco] field, you had better not sell Linksys because they're not compensated on it," the partner said.

NEXT: Cisco's plans to win partners for Linksys