Nortel Enterprise President: Cisco Partners Fear Reprisal

Nortel is wooing many Cisco Systems partners who fear that if they take the Nortel plunge the nation's top networking vendor will "cut them off, lower their discount points and take away certain levels of accreditation," said Nortel Networks Enterprise Networks President Malcolm Collins in an interview with CRN. Many partners have expressed interest in representing Nortel's products but have held back for fear of retaliation by Cisco, he said.

Cisco would not comment on the charges by Collins.

"There is a lot of pressure put on partners even sometimes when a partner wants to deal with Nortel," said Collins, who was named the head of Nortel's enterprise business in December. "This is my challenge: How do I get some of my big partners back to believe they have a choice again?"

One Cisco partner, who did not want to be identified, said he would not publicly promote a new separate vendor-agnostic consulting business that his company established because of a fear that Cisco would withdraw support for the solution provider's primary networking business.

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Another Cisco partner courted by Nortel maintained that "there is no such thing as a Cisco partner. There is a Cisco slave," said Collins. "A Cisco slave--it's an interesting term."

"The big issue we've got is whether [Cisco] partners will open up," added Collins, noting that Nortel is chasing a number of Cisco partners. "The fear is still there. I am not sure they will open up. Our strategy is to gradually get into these accounts and start working with them."

The fear factor that solution providers are operating under with Cisco is not a sustainable long-term business model for partners, said Collins. He compared the plight of the Cisco solution provider to an addict smoking crack cocaine. "You know you shouldn't be doing it, but every day you are still taking your fix," he said.

"There is a high level of excitement and energy and a willingness to work with us, but also a fear because a lot of their business is still dependent on the other manufacturers' business," said Collins. "What we have got to do is just push some over the precipice. They want to be there. They want the alternative, but today there is a fear."

Nortel is in the midst of an aggressive channel recruitment effort backed up by new training, lead generation and midmarket voice data convergence applications, said Collins. The midmarket effort emphasizes the solution provider as the brand. Solution providers focused on the midmarket "want to sell a product where their brand is more important and where the technology partner is a true partner that supplies the technology. We are certainly seeing in the midmarket massive opportunity for us."

Collins said Nortel offers much higher profit margins on its product line than Cisco and plans to limit distribution to protect those margins.

He also criticized Cisco field sales representatives who pick and choose partners for certain projects based on such things as who has the lowest margin on the deal. "I don't think it is the right of the manufacturer to play God," he said. "So today if someone is dealing with an end user they go to two or three of their partners and decide which one gets it based on who is going to take the lowest margin."

One big issue for Nortel partners is that customers have not been issuing requests for proposals for new equipment. A number of customers are "wrapped up in a mind-set that once you have got one of these products from someone like Cisco, you've got to buy all the other stuff [from them]," Collins said.

"What we want to do with the marketplace is give choice back," said Collins. "Give choice back to the partners. Give choice back to the end users. And do that in a way so that people can make a profitable business by working with their partners."

Larry Hooper contributed to this story.