Cisco Systems Australia is aiming to move 25 per cent of its sales to distribution, as the vendor further reduces the number of local direct resellers.
According to managing director Gary Jackson approximately only six resellers will be able to buy directly from Cisco. This group will be made up of Cisco's Gold resellers, and possibly one or two Silver resellers, with the final mix to be determined later this week. The rest of the Silver resellers will then be directed to buy through Cisco's three distributors, Express Data, LAN Systems and Tech Pacific.
Over the last year distribution accounted for only 5 per cent of revenue, but in the last quarter that figure had risen to around 13 per cent. Jackson says resellers can expect to see that figure continue to grow. "It's an aggressive target. I think conservatively it will be 15 per cent, and I think we can get to 25 per cent." The target for indirect sales is 70 per cent, said Jackson.
Cisco recently reorganised intern-ally to concentrate on three lines of business - telco/service provider, enterprise, and small and medium businesses.
Jackson said the last area will be serviced primarily through distribution. Rather than launch a broad-based marketing campaign to support its channel and raise brand awareness, Cisco will concentrate on specific vertical markets, such as the legal community and local government.
Creating demand plays an important part in entering this market, Jackson said, adding, "there's no point saying we're going to have a lot more resellers underneath distribution and doing nothing about it to drive it".
Jackson also sounded a warning to resellers about the impact of telcos entering into their traditional marketplace, with the belief that a consolidation of smaller players is likely.
"I really believe that the telcos have enormous opportunity to be quite strong players," Jackson said. "I think that it's definitely going to be a much tougher market to be a small player, particularly in the corporates. The larger companies will continue to do well, but when the telcos as service providers can look at full service level agreements with companies, that is a competitive position that the resellers haven't had to worry about."