In a bid to combat the recession and to stimulate channel business in Canada, Cisco Systems (Nasdaq: CSCO) is offering solution providers between five and 15 per cent extra margins on core routing and switching products.
The Toronto-based subsidiary also announced changes to its the warranty structure on the Catalyst portfolio. The company currently has lifetime warranties on all its models except for the 4500. That product will now have a limited lifetime warranty.
Rebecca Leach, director, partner programs for Cisco Canada, said solution providers will get 15 per cent margin rebate on switching products and five per cent on routing products.
“This will drive profits on routing and switching and it could double or even triple switching margins, while giving partners an opportunity to drive new business,” she said.
This new incentive will be part of the Accelerate to the Core program and is in conjunction with Cisco’s Opportunity Incentive Program (OIP), which rewards channel partners who hunt and win new business or displace competitors in other accounts.
According to Leach, Cisco has uncovered $23 billion worth of opportunity in the current installed base. Most of those customers have routing and switching technology that is more than five years old.
“We are trying to turn that customer base and in the past it has been a low margin opportunity and we are now looking to boost profits in this area,” she said.
Also part of the Accelerate to the Core is a portal called PartnerSpace which is designed to accelerate partner-to-partner collaboration. Leach said she and the channel team at Cisco Canada is making a concerted effort to reach out to partner groups such as Ingram Micro’s VTN and Tech Data’s TechSelect communities for PartnerSpace.
“Cisco participates in both groups and those two groups are an excellent example of partner-to-partner collaboration,” she said.
Leach added that Cisco Canada has invited both partner groups to join PartnerSpace. PartnerSpace has a global search engine that can showcase a partner’s expertise. “PartnerSpace is a great way to formalize the service partnerships and create profiles that are searchable. And, it creates the type of partner ecosystem that we are trying to achieve,” Leach said.
Dave Frampton, general manager LAN switching business unit for Cisco, said the new lifetime warranty lines up the support policy in a consistent way.
Prior to this announcement, the company had patchwork support systems for various tiers of software roadmaps and updates. “Now you will get evergreen support,” Frampton said.
One segment in particular that needed this change was large public sector verticals that purchased base Catalyst equipment via one-time grants. These customers did not want to purchase premium products because of the support structure. With a lifetime warranty, Frampton believes it will provide the channel with an up-sell opportunity.
Frampton added that Cisco is also aggressively reducing prices with the introduction of a low-end bundle. The LAN Access Bundle covers Layer 2, 3 and Basic Layer 2 and 3 switching. According to Frampton the price reduction is in the neighbourhood of 30 per cent.
