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Home > IT Channel News > VARs brace for shakeout from Cisco data center server |
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Cisco Systems Inc.'s vague plans to enter the server market have put its partners on notice for potentially big changes ahead. For one thing, many solution providers that sell Cisco's routers and switches also sell Hewlett-Packard and/or Dell and/or IBM servers. Given that all of these hardware vendors want high "attach rates" for their gear, this could lead to conflict in that HP wants its server resellers to also sell HP storage, HP systems management, HP laptops, HP printers and sometimes even HP ProCurve networking gear. Ditto Dell. Ditto IBM. And, ditto Cisco.
The upshot is that many of these partners surmise that when the Cisco data center servers hit the shelves, the networking market leader will want its best and brightest partners to sell only Cisco servers. So, partners that once easily cross-sold networking and servers between vendors could feel pressured to drill down further with one vendor, cutting off other supplier relationships. What makes that more complicated is that Cisco itself partners with HP, Dell and IBM even though HP, for example, is a big competitor with its ProCurve network hardware business. Tech vendors break into new marketsAs the economy falters and the tech vendors seek new opportunities, solution providers say there's bound to be more, and more intense, competition for business. "They're all fighting for one room: It's called the data center. HP and Cisco are going to be fierce competitors [there]," said Don Wisdom, president of Datalink Networks, a Cisco and HP partner based in Santa Clarita, Calif. Channel experts warn partners to keep their powder dry, for now. "A lot of this will depend on exactly what Cisco does with its server positioning," said Tom Nolle, president of CIMI Corp., a Voorhees, N.J.-based IT consultancy and a former VAR. "No question this will raise the angst at the highest levels, meaning HP and IBM. You have to assume Cisco is prepared to accept that, and if they are, channel conflict is the least of their worries." Nolle also noted that VARs may create their own conflict. "It's likely that Cisco servers will carry a higher margin and better resale opportunity than the corresponding IBM or HP models, and [VARs] will act accordingly," Nolle said. "But if I decide to sell a brand because company A has a better margin and engagement, do I really care if I piss off company B? The risk here is almost that IBM and HP may find themselves pushed out of some channel opportunities no matter how hard Cisco tries to position its servers so that [contention] won't happen." Wisdom is in a good position to watch this unfold since Datalink partners with HP, HP ProCurve and Cisco. The issue will be that Cisco has a very strong hand with its partners and try to pressure those partners into eliminating other server vendors. As evidenced by a lawsuit waged by Infra-Comm, a Cisco partner, against Cisco last year, the networking vendor tends to be controlling in its channel interactions. Wisdom said when the new Cisco data center servers arrive, he'll assess the situation. "We'll look at the product set and we'll look at what kind of program there is." Cisco data center server move could spark certification issuesOne issue is the cost -- in time and money -- of certification and training. He thinks there may be a separate certification around the servers and that there will be an issue if the servers can only be sold by Cisco Gold partners. "If you're not a large outfit, you have to invest the time to get certified, and it takes work to get a Cisco Gold certification. Once you put that work in, [you're] not going to go out and get ProCurve Elite certified. If you get both of the certifications, Cisco is not going to work with you," Wisdom said. Since Datalink has grown its ProCurve exponentially in the past couple of years, that situation would likely lead to moving away from the Cisco server portfolio, he said. Most VARs realize that their vendors are trying to grow their footprints in existing accounts as well as win new business. And that means the pressure on their biggest and best partners to be more exclusive will undoubtedly grow. Despite some worry in the field, some VARs are looking forward to more details on the elusive server and Cisco's go-to-market plans. Some have a wish list. Ben Patz, CEO of Coleman Technologies Inc., of Orlando, Fla., is one such solution provider. We're looking for tighter coupling to the network, that's number one. Then people have to get a lot more serious about energy management," he said. Patz said this move by Cisco is just another step in the long road of coopetition. He likened it to Microsoft's move into unified communications, which put it at odds with its tight hardware partner Cisco.
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