Cisco executives were in a self-congratulatory mood last week during the Cisco Partner Summit in Las Vegas.
Slide after slide demonstrated how Cisco's turnover dwarfs that of rivals Lucent, Nortel, 3Com and Foundry.
Tom Stevenson, vice-president of global partners at Cisco, told resellers at the Bellagio Hotel that the vendor's performance was mainly due to its channel, which now generates 80 per cent of its turnover. Cisco is on course to turn over $18bn (£11.2bn) this year, claimed Stevenson, $4bn of which will be generated through two-tier distribution.
Don Listwin, Cisco executive vice-president, said the only question now is "Can we keep going?" He presented slides showing how the ecommerce and next-generation internet markets will provide continued growth. These, as one UK systems integrator pointed out, could have come from any IT company.
But there was a warning between the lines. VARs were told to study industry trends and ensure their business models reflected their places in the market.
Scott Ferguson, director of worldwide channels at Cisco, said: "These [web-based] tools will end up being available to end-users."
The tools he referred to are automated network design tools, and the configuration validation and procurement tool NPMR (Networking Products Market-place for Resellers). In the short term, such tools will improve pre-sales productivity for resellers. But Ferguson admitted that end-users of these tools will eventually buy product over the internet, without recourse to a reseller. "We are formulating our business model for web-based trading," said Ferguson, but he would not say when Cisco would start to implement it.
The channel owns the customer
Cisco may manage product shipment over the web and even print out invoices on behalf of resellers, but the channel will continue to own the customer, insisted Ferguson. Web-based trading will require a new channel model, but it is too soon to give details, he said. "Whatever business rules evolve, the key will be channel involvement," he promised. Resellers need to make sure they are ready for basic network design and procurement to be done on the web, he advised.
Listwin said Cisco wants one acquisition every fortnight this year to keep the supply of new technologies flowing. He revealed that Cisco will develop partner specialisation programmes in technologies such as wireless and optical networking, including contact centre software, collaboration and ecommerce. Considering Cisco does not own many such applications, this could be taken as an indication of future acquisitions.
Jonathan Wagstaffe, managing director at Oxfordshire-based Cisco premier partner Connectology, said: "I've heard similar things from other vendors, but Cisco seems to have thought things through a few stages further." Cisco's channel programmes are the most sophisticated in the market, he said.
Cisco called Lucent and Nortel old-world, vertically-integrated companies tied to selling public exchanges (PBXs) and call-centre software. Listwin promised an open, horizontal approach from Cisco, based on third-party innovation.Positive spin
Lance Travis, vice-president at analyst AMR Research, said Cisco's talk of open standards glosses over the fact that its IOS platform is proprietary.
"This is more about Cisco's efforts to use XML as an interface to IOS," he said.
Travis said that Listwin's comments about Lucent and Nortel just put a positive spin on Cisco's lack of applications and PBXs. Listwin talked about optical networking and claimed the first stage of Cisco's optical strategy was now in place.
"We're working with a startup that plans to deliver 100Mbytes to the front door for $1,000 a month," he added.
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