Cisco's Best-Kept Secret: Distribution Growth

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About distribution's role in the cloud computing era, Brown said Cisco is committed. The networking titan plans to continue to leverage its major distributors not only for traditional products but also for cloud-based services such as its Hosted Collaboration Solution, WebEx collaboration, IronPort hosted e-mail security and ScanSafe Web security.

"I think they'll make the transition very well," Brown said of distributors and the cloud. "We believe [in] doing it through them and with them as opposed to standing up a huge data center and server farm. We believe there's so much value that's added by the channel."

It's more valuable for Cisco to partner with the distributors instead of cut them out, Brown argued, because distributors are still very influential among solution providers, particularly SMB-focused VARs and integrators.

"I really do think distribution is going to play a big role. You can't underestimate the stickiness of the relationship they have with the partner base," he said. "Distributors provide the lifeblood, working capital, they take a risk on partners by providing them credit capacity and presales help, to name a few. It's a symbiotic relationship."

More cloud-focused Cisco distribution offerings are coming. Cisco in July will launch a program through which its distributors will be certified on sales of Cisco cloud offerings, including Hosted Collaboration Solution, ScanSafe, IronPort, WebEx and VXI, Cisco's VDI platform.

"We'd tried a few pilots and decided to go broadly with that in the last year," said Brown. "I think it shows the strategic importance of this route to market."

Cisco distributors also will soon be able to create their own white-label services offerings using Cisco offerings such as SmartNet and Advanced Services -- part of a broader push by Cisco, unveiled at this year's Partner Summit in San Diego, to drive what it says is a $200 billion total addressable market in services opportunities for the channel.

But the best opportunity for Cisco distributors to expand their participation may yet be partner-led, the broad channel sales initiative Cisco rolled out last year to drive more sales to midmarket and small-business customers through solution providers.

Several distributors told CRN Cisco has pitched partner-led to them as, in the words of one, "prime time for the SMB customers our partners know best," and something in which Cisco expects distributors to take a lead in as far as training and motivating partners.

"It's clear they want the long tail of the reseller base," Comstor's Pritchard said. "They see partner-led as a way to get a bigger channel than what they have today, and they want us to make commitments to partners to help them escalate with Cisco. It's still a challenging market out there -- everyone wants to see better growth. But they're working to maximize [the opportunity] for us."



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