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Newsletter Home > December, 2008
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Cisco Takes it to the Down Low
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Cisco systems has embarked on a $100 million campaign to capture the lion's share of the sub-100 market; one of the few categories in networking where the San Jose-based vendor has not already built a strong position.
This is not the first time that Cisco has moved down-market, but the recently-announced strategy represents the largest investment of resources aimed at the small business market. Aside from the $100 million investment, the initiative has also received a task force of several prominent Cisco executives who are expected to shepherd the plan to success.
A new set of product offerings will be geared toward small businesses that have higher demands on technologies than most other small businesses. The first products will be focused on video surveillance, data storage, and wireless communications.
The company has recently folded the Linksys consumer-level product lines into the larger Cisco portfolio, and combined the channel program from the Linksys subsidiary into the larger Cisco program. But this campaign clearly focuses Cisco to look at its products, customers, and channel partners in different ways.
"We see three types of customers in the small business space," explained Cisco vice president Andrew Sage. "There's a basic customer who has very simple needs; they want it fast, effective, and easy to deploy. The second group we call open to guidance, and this is the vast majority of the customers in the sub-100 segment. These are customers who are potentially going to make a strategic technology investment, and would be very open to a solution rather than a transaction, if it were simple to understand, cost-effective, turnkey. Then there is the Elite customer who has enterprise-level requirements even though they're a small business. They're about four or five percent of the customers in this space but drive about 20 to 25 percent of the revenue. All three of these groups are opportunities that we can pursue with this broad portfolio under the Cisco umbrella. That includes the products we brought in from Linksys, some brand new products we're developing for that middle section, and the rest of the Cisco portfolio for the Elite customers."
For the go-to-market component, look for Cisco to leverage retailers and DMRs for the basic customers, service providers and a portion of the reseller community to serve the open to guidance customers, and a higher-level subset of the reseller base for the Elite customers.
At this time, there are almost 60,000 Cisco partners able to support small business customers. Of that number, approximately 9,000 have business practices that effectively make them small business specialists.
Supporting program components include dedicated contact centers in South Carolina, the Philippines, China, and Europe that will provide small business customers with 24x7.
SMC Updates Channel Program
Irvine, California-based SMC Networks has revamped its Elite Partner Program, and upgraded its website for partners.
Through the revised program, Platinum level partners receive 3% deal registration rebates, 3% market development funds, and distribution rebates of up to 5%. Gold-level partners have increased access to sales leads, priority tech support, 2% market development funds, and a variety of other benefits. Silver-level partners receive a discount on demonstration gear, a 30 day evaluation program, and other benefits.
In addition, the new SMC Academy will provide weekly technology seminars and educational resources for channel partners.
Juniper Names VP, Services & Support
Juniper Networks, Inc. has announced the appointment of Mike Rose to the newly created role of executive vice president of Service, Support and Operations. Rose will report directly to Chief Executive Officer Kevin Johnson.
Rose was most recently the senior vice president and chief information officer for Royal Dutch Shell, where he led a 10,000 person service and IT group. Prior to Shell, Rose had a 23-year career at Hewlett-Packard (HP) in roles across finance, IT and field operations.
Since July 2007, Rose has served on the Juniper Networks board of directors. Rose has resigned from the Juniper board position effective upon the commencement of his employment with Juniper.
Extreme Networks Names Cross Telecom Elite, Diamond-Level Channel Partner
Extreme Networks, Inc. announced that it is furthering its North American Channel Partner program by welcoming to its channel program Cross Telecom, a national integrator of convergence solutions, advanced applications and data networks.
Cross Telecom will be an Extreme Networks Diamond-level partner. The integrator is already a Platinum Avaya Business Partner specializing in advanced data and voice systems. Extreme and Avaya have an alliance through which the two companies share a number of channel partners in common.
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On The Other Hand - Avaya's Channel Vision: A Cisco-like Transition?
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By: Ken Presti
For the past few months, Avaya has been talking about the indirect sales channel at an entirely different level. Historically, Avaya has wavered between a commitment to the channel and a preference for direct sales with the company's substantial services arm as the centerpiece of the go-to-market strategy.
All that is about to change, according to interim CEO Charlie Giancarlo, who plans to remain on the board of directors after incoming CEO Kevin Kennedy takes his place in January. In keeping with Giancarlo's heritage at Cisco, he believes the partners should play an integral role in the sales strategy, and that programs should be optimized to ensure that Avaya, its partners, and their mutual customers get their needs met.
Whether or not Giancarlo's position is unanimous among the management team is at least somewhat questionable. That's aside from the company's selection of Kennedy as its new CEO. A former service provider executive at Cisco, Kennedy's perspective has historically shown a preference for direct sales. So it's difficult to assess whether the on-again, off-again approach to the channel might soon swing back in the other direction.
In a way, the whole thing is reminiscent of Cisco's transition to direct sales back in the mid- to late-90s. In those days, Cisco struggled with the triangular effects of channel sales and, in response, questioned why they should "give profits away" to third parties. But cost-of-sales and similar issues continued to push the company towards the channel. So Cisco tried, stumbled a few times, and then tried some more. Part of the problem was the fact that there was far less than unanimous agreement on indirect sales as a concept.
This ultimately led to the direct touch model; a variant of which is in place to this day for certain portions of the market. By keeping the field team in touch with the customer, Cisco had the opportunity to try indirect sales without losing the option of beating a hasty retreat back to direct sales, if things did not work out to their liking. But things did work out to their liking. And while Cisco eventually evolved one of the most complex channel programs in the industry, they also have one of the strongest commitments to the channel.
It will be interesting to see how Avaya extends its channel strategy. While their circumstances are in some ways similar to Cisco's, in other ways their circumstances are completely different. The industry is much different from what it was in the mid-nineties, and Cisco did not have a large global services unit, as Avaya does.
But the gauntlet is thrown down. The channel is watching, and wondering how the discussion will translate into action within the program, itself.
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