Brocade and Cisco focus on channel partner profitability

It appears that channel partner profitability has become a new focus for both Brocade and Cisco: "General feedback from channel partners is that they are sick and tired of being driven down the low single-digit margin path and at the same time being asked to massively invest in a vendor partnership," said Barbara Spicek - Vice President of Worldwide Channels at Brocade. "The great news here is that what we at Brocade are designing and launching in June is a program that is going to be all about Quality of Partnership, focusing on bringing profitability to the partner, and actually investing from our side in partner certification rather than grabbing into partners’ pockets." Simultaneously, Cisco has also focused on its channel partner profitability. Ken Presti a channel partner consulting expert noted: "Cisco has rolled out new incentives aimed at encouraging channel partners to more actively hunt routing and switching sales opportunities." Presti also revealed that Cisco's back-end rebate to its channel partners on switches has grown from 10% to 15% and is now offered globally. Apparently there has not been enough margin for Cisco channel partners to justify the work they encounter when trying to upgrade the installed base of $23 billion in Cisco network core products that are more than five years old. For example, when Cisco reported its recent Q3FY09 financial results, its switching revenue plummeted 20% year-over-year (Cisco's modular switching revenue dropped 22% year-over-year, while its fixed switching declined 17% year-over-year). An interesting comparison: Recent Brocade F2Q09 financial results show that IP product revenue grew to 24% of Brocade's total revenue from only 12% in F1Q09.

What's your opinion, is channel partner profitability the key to a successful future for both Brocade and Cisco? BradReese.Com Cisco Refurbished - Services that protect, maintain and optimize Cisco hardware Contact: Brad Reese | Twitter:

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