Nortel, Cisco Remain Loyal to Channels

SINGAPORE (04/19/2000) - While others ring the death knell on adopting a channel strategy, networking vendors such as Nortel Networks Corp. and Cisco Systems Inc. remain deeply focused on strengthening their reseller relationships, which they say are key to success in the small and medium business (SMB) market.

Nortel is pumping up its commitment to resellers, and has now extended its channel strategy to other units throughout its organization, including SMBs, according to Jim Vogt, president for small business solutions, Nortel.

"Our first task is to build a high-leverage model to SMBs through a two-tier distribution strategy, building machines that are highly-automated," Vogt explained.

Vogt views Cisco Systems as Nortel's strongest competitor, whose demand in the SMB market is "based on brand", but "channels don't like working with them".

"It's a two-horse race between Cisco and us, and the vendor who can build a stronger channel relationship will win," he said.

Cisco declined comment on Nortel's claim, but noted that it has for the past two years, focused on building up its Asia-Pacific channels infrastructure for the SMB market, strengthening existing relationships and recruiting more partners, according to Fredy Cheung, director for small and medium business, Cisco Asia-Pacific.

"We invest in training them on the latest Cisco technologies and products, giving them an insight into future developments and providing them with full access to internal resources such as our Technical Assistance Centers, and Web site, Cisco Connection Online," Cheung said.

"Cisco believes in empowering our resellers with the knowledge they need to be successful when selling to their customers," he said, adding that Cisco University conducts regular training sessions for its resellers in Asia-Pacific. And while Cisco's service provider business is its fastest growing segment for the past two years, the company is starting to see strong growth in the SMB market, he said.

"When you consider how explosive growth on the Internet has been and how important Internet access and networking in general has become, its only a matter of time before the SMB market starts to invest in the technology," he added.

"The player that wins is the person with the best luck on the channels, and you do that by creating value for your resellers," said Vogt, citing figures from International Data Corp. (IDC) which revealed that 85 percent of transactions in the SMB marketspace are influenced by resellers.

"The VARs (valude-added resellers) themselves are SMBs, with high-growth but low resources. They're not making money selling boxes, so we have to help them generate revenues through bundled services and solutions."

"More than simply pushing boxes, we want to provide the complete solution to customers, and that's what the VARs are looking for," said Ong Wei Ping, senior manager, channels and small business solutions, Nortel Southeast Asia. This is a view that Cisco is also in agreement with.

"We constantly encourage them to be more than pure box movers, and to play more than just a point-of-sales function," Cheung said. "Customers, especially SMBs, need guidance in buying and deploying networking products, and who better to provide that service than the resellers or retailers."

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