Cisco's Data Center Ambitions Stir the Pot
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In an industry ripe with vendor rivalries, the latest battleground is notable for its many-against-one flavor. Alliances have been forming in what appears to be a mission with a singular goal: Anyone but Cisco. Clearly, Cisco's breaking beyond its networking roots in a quest for dominance in the data center space has rattled more than a few of the major server and infrastructure players from HP to Dell to IBM. The rhetoric alone from some of the latter company's executives only proves that out. Many are looking at holes in their portfolios to fill and strategic alliances to form. Dell is just the latest to strengthen ties to another vendor in a way that shores up its offerings against Cisco's Unified Compute System initiative. The channel-come-lately vendor on Wednesday expanded its existing OEM relationship with Brocade to develop a Dell-branded virtualization solution that will help optimize and manage the data center. The alliance also involved integrated tool sets for managing the delivery of applications as services across the data center infrastructure. Dell also is not the first vendor to look to Brocade technology to round out its data center capabilities. Earlier this month, storage player NetApp tightened its ties to Brocade, adding three new Brocade products - a switch, blade and converged network adapters - to what it resells on an OEM basis. Likewise, IBM upped its partnership with Brocade and NetApp, and inked an OEM deal with Juniper that adds a networking infrastructure component to Big Blue's portfolio. IBM shed most of its networking business some years ago, but as data center convergence takes hold might be realizing it needs to play here more broadly. That message was clear when Cisco broke into IBM domain of blade and rackmount servers this year. To be sure there's competitive jockeying among all the major players with no formal gang forming against Cisco. But the shoring up of data center portfolios and the strengthening of strategic alliances went into high gear about the time the networking giant went public with plans to be more than just switches and routers. The question I have is this: As the Tier 1s duke it out, are there Tier 2s and below vendors that might benefit as the alternative or best of breed, while also giving solution providers a more defined, simpler place to focus?
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Comments (2)
I do not believe the Tier 2 opportunities are real/robust, because it is all about delivering the customer a great solution, and a tremendous value as partners and vendors drive costs out of IT.All through the customers eyes, Denali Advanced Integration of Redmond,WA forms stargetic alliances with vendors that deliver the best solutions...HP...Microsoft...CA...Motorola
The winner is the Tier 1 who understands the value/reach of the Partner/VAR. CISCO has shown a re-birth for VAR's they ingnored for years...Michael Dell does not even mention their partner program as a key strategy in their recent earnings announcement, and HP's Partner/VAR support is their "Secret Sauce " in assuring they will win the battle of the giant's ..HP's support for the VAR is the best of the best starting from the top - Mark Hurd..and Partner One has evolved over the years as the best of the best partner program focusing the VAR on solutions and profits.
Posted by John Convery | September 7, 2009 1:00 PM
A different take....
I believe the real innovation is happening in the "tier two " space. Most don't hear about it until a smaller provider is bought by one of the big names.
The difference to me is focus.
No single manufacturer has the best technology in every category. Eventually, all of the tier one's have to move away from the thing that made them successful. The growth wall street demands requires companies to diversify. As this happens, these firms start to rely on their size and install base to keep their competitive advantage. It simply becomes harder to innovate as the firm get's larger and needs to keep growing customer wallet share.
Smaller manufacturers usually do one thing and do it well, which is why they are getting bought, almost every day. (Data Domain, EqualLogic, LeftHand Networks, Cognos...) The tier two's also tend to have much better partner programs and are often 100% channel focused. There is a world of difference between a 99% and 100% channel focus.
A VAR can thrive using products only provided by the "tier two" space and do quite well for themselves and more importantly, bring significant value to their customers. It does require exceptional technical skills and a willingness to break away from the "guest of the vendor" approach so prevalent in the IT VAR industry.
Regarding Dell...
I would not count Dell out of the channel business yet. Many of Dell's acquisitions have as much to do with purchasing a company with an exemplary channel program as it does finding the right technology for the portfolio.
Dell seems to be as focused as any manufacturer I've seen in making the channel work. It is true, Dell is getting a late start and has to change it's very direct focused culture (their biggest hurdle). To my surprise, Dell is doing an exceptional job by any standard and much to my surprise.
I have dealt with all of the manufacturers mentioned previously. Cisco is the only one I know of to have a judgment against them in a court of law for violating a partner agreement. Things may have changed but that is tough to live down.
Having managed over forty partner programs in the last couple of years, I find the ones from the large vendors fairly similar. They are often overly complex and in the worst cases, dictatorial. The smaller vendors truly need partners for their very survival. This interdependency is at the heart of a true partnership.
The VAR that will ultimately win will be the one that can mix tier one and tier two vendors without being managed by either. If you can add in a significant amount of your own Intellectual capitol, you have a wining recipe.
Posted by Paul Frischmann | September 8, 2009 10:54 AM