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Cisco offers channel a carrot

Cisco's channel partners have paid scant attention to its SAN specialization program, prompting the company to offer them a rebate if they get involved.

Cisco Systems Inc. has taken to dangling a carrot in front of its channel partners in the form of a rebate if they join its SAN specialization program and -- more importantly -- sell its storage switches.

Since it launched the SAN specialization program last June, Cisco claims to have signed up 35 resellers. However, according to Cyndi Privett, analyst with View Point Research, very few have actually taken the course and become certified to sell the gear. "When I last checked in November, only one reseller had qualified," she said.

In an effort to convert those resellers that have signed up and to encourage others to join, Cisco has introduced the Clear Advantage program, which translates sales of its MDS 9000 storage switches into points, with each point being worth $1. Points are derived by taking 5% of the average OSM (original storage manufacturer) (OSM) transfer costs.

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Unlike other Cisco products, resellers have to first purchase the MDS 9000 switches from Cisco's OSM partners that include, EMC Corp., IBM, Hitachi Data Systems, Hewlett-Packard Co. and Xiotech Corp. This is known as the transfer cost and is inhibitive to resellers as they must shell out for the gear before making any sale themselves. Cisco set up its storage channel this way because it had to have the major storage players involved in selling its technology first to establish a presence in the market.

The outcome, according to Privett, meant that resellers had "several reasons not to join the SAN program and very few reasons to do it." And yet she thinks Cisco should clean up in this market. "Cisco has captured good market share in a year without really putting a lot of muscle into it … This is a first step towards really turning up the heat." She added that Cisco has some of the world's best resellers selling its products.

There are approximately 150 key storage resellers out there that Cisco is courting. Chris Lusk, director of open systems and storage at Sirius Computer Solutions Inc., a San Antonio reseller, is one of them. Lusk said the program compares favorably to McData Corp.'s rebate program, although McData's program, which pays a set fee per transaction, is easier to use.

He added that Cisco's growth targets are pretty high, 20% per quarter, but partners that miss this goal can make up the numbers the following quarter or at the end of the year.

Overall, Cisco's storage sales are improving. Last quarter, the company reported 40% sequential growth and a 70% year-over-year increase in MDS switch sales. Still, that 40% equates to approximately $56 million in revenue, which is small fry for a company that turned a profit of $1.4 billion last quarter. It's also a long way off Cisco's publicly stated goal of reaching $1 billion or more in revenue related to storage applications.

Clear Advantage program requirement

In order to qualify for the program, channel partners must be Cisco-registered partners. The rebate is paid based on meeting the entry-level criteria, milestone criteria and achieving the revenue goals during the entire period in which the partner participates in the Clear Advantage program, including submitting a business plan and becoming a Cisco SAN specialized partner.

To participate in the program's first two quarters, partners must apply by March 21, of this year. The Clear Advantage program is currently available in the American, European, Middle Eastern and African sales regions. However, each region's program initiatives and prerequisites are customized based on local market needs. Click here for more information about the Cisco Clear Advantage program.

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