Cisco Wont Ante Up

CEO Delays acquisition strategy, as partners head to Las Vegas conference.

Cisco Systems is hoping for a little luck during this weeks Partner Summit in Las Vegas. The company is used to holding a winning hand, but CEO John Chambers has concerns about the economy and has halted Ciscos acquisition strategy for the foreseeable future.

Cisco isnt the only networking company down on its luck. Nortel Networks dismissed 10,000 employees in January and now says it needs to cut an additional 5,000 employees to compensate for slowing sales. Lucent and 3Com also are hurting.

Still, its important to keep the bad news in perspective. Unlike mismanaged dot-coms, Cisco remains very profitable and the company continues to refine its partnering strategy. A retooled pricing policy, for instance, will be a hot topic of discussion at this weeks conference.

Cisco in March disclosed plans to eliminate volume discounts for allies at the top tiers of its partner program. Discounts will be based on a partners certification and specialization. Translation: Box pushers that focus on sales volumes wont have the upper hand against solutions providers.

In the past, Web and catalog shops emphasizing sales volume over service undercut Cisco partners that invested heavily in specializations and staff certification. In some cases, customers hired solutions providers to specify and install a network but purchased Cisco products through a catalog operation.

Ciscos evolving specialization program encourages solutions providers to develop skills in Voice over IP, wide-area networking, wireless, security and other networking fields.

"The whole idea was to give [partners] a level playing field from a price standpoint," says Jim Clark, president of AC&C Network Services, an Orange, Calif., network integrator.

Security also will be a hot topic at Partner Summit. Cisco recently extended its AVVID Partner Program ( to include best-in-class allies that can help customers to implement, analyze and manage their security solutions, says David King, a senior marketing manager at Cisco.

Partners hope to hear more about the strategy. "Ive been to every Cisco Partner Summit, and I look at it as the key strategic event of the year," says John Freres, CEO of N2N Solutions, a Cisco Gold Certified Partner. N2N has gone from zero revenue to nearly $40 million in just three years. Freres credits much of his firms success to lessons learned at Ciscos event.

"We were able to build this years business plan based on cornerstones set forth at last years summit," he says. Previews of Cisco acquisition Geotel inspired Freres to establish an IP telephony practice before most rivals wised up.

Freres is such a Cisco Summit believer that he is taking two of his board members to the event on his own dime.

Everybody goes to Vegas expecting to hit the jackpot. This year, that wont be quite so easy for Cisco and its partners.

David Hakala, John Moore and Joseph C. Panettieri contributed to this story.