Editorial: Winner takes all
- 13 August, 2003 15:13
If the unconfirmed speculation about Ross Fowler’s appointment as the new local MD of Cisco proves correct, the choice is not only going to be an ‘inspired’ one, but also good news for the channel. Fowler’s reputation as a committed channel operator may precede him, but make no mistake — it’s not the traditional but telecommunications channels that Cisco has been focusing on for a while — and this space is Fowler’s forte.
Cisco has been muttering for a while that its traditional channels are not set up for vertical markets. Over the last couple of years, the vendor has been playing with several programs aimed at improving the profitability of its traditional supply chain and has introduced an array of new options for its tier-one reseller base. Margin erosion at the high-end certainly required some tough measures.
It is all part of the new channel paradigm which emphasises return on investment (ROI) and vertical market solutions as its basis. And this approach requires the vendor to de-emphasise their relationship with non-value delivering players in the traditional space and turn to a new type of partner.
Consequently, the company recently announced its intention to cull a number of distributors globally while actively seeking new partners to deliver value vertically. ISVs and telecommunications companies are to be the direct beneficiaries of this realignment.
This is not to say that the vendor has shifted its focus away from breaking into new horizontal markets. The push into the SOHO networking sphere was recently crowned with the acquisition of home networker, Linksys. Indicatively, Cisco’s 81st strategic acquisition was its first predatory move after two years of market-enforced hibernation, and it was designed to ensure it grabbed a piece of the $US3.7 billion SOHO wireless pie. Cisco’s SMB solutions program shows its horizontal channels are here to stay.
However, Cisco president and CEO John Chambers’ new ‘value-engagement’ mantra obviously favours vertical solutions sellers operating in new markets — and in new ways. A local executive recently commented that a whopping 80 per cent of the vendor’s new business came through telecommunications partners. Could this explain Cisco’s choice of the new local top executive? Probably.
Chambers’ commitment to the traditional channel is, of course, legendary, and Fowler’s reputation in dealing with it impeccable. However, which parts of the channel are going to benefit from Fowler’s charter remains to be seen. Most agree the net winner will be the vendor itself.