Cisco reveals designs on San switching
The channel gears up to play a major role as the networking giant sets its sights on storage networking.
The channel is set to play a key role as networking giant Cisco aims to become a major player in the storage area network (San) switch market, following its acquisition of Andiamo Systems.
Cisco did not publicly announce the existence of Andiamo until early this year, despite the fact that the networking giant had been secretly funding the firm, which is based at Cisco's premises in the US.
The vendor expects to pay up to $2.5bn to acquire the part of the company which it does not yet control. The precise figure will be based on Andiamo's sales in the three months before the deal's completion, as well as Cisco's sales and market capitalisation at the time.
According to the networking vendor, the acquisition will complement its range of storage products. "This deal supports Cisco's plan to enter new growth markets, such as storage networking, where we believe we have the potential to be the number one or two player," said chief executive John Chambers.
The announcement has been expected by market watchers for some time. Robin Burke, an analyst at Gartner Dataquest, said: "With Fibre Channel switching products expected to grow at over 37 per cent per year for the next five years, Cisco chose a high-growth market, first by investing in Andiamo last year, and now, as expected, by purchasing the company."
Burke explained that there would be tough times ahead for the vendor, adding that it will take time for Cisco to even build market share in the storage Fibre Channel switching market. This is because Brocade is dominating with a 58.6 per cent global market share, and McData boasts 28.9 per cent.
"Building a high-percentage share of any market takes time," he said.
But Cisco's skills in networking, combined with its indirect channel focus, mean that it could become a significant storage player by taking high-end storage switching to the enterprise market.
The technology acquired will blend the benefits of data and storage networking and enable Cisco to develop products for enterprise customers, Chambers said.
But the company must evolve its channel if it is to succeed in becoming a top player in the San market, according to Stephen Martin, an analyst at Z/Xyen Aspect. "Cisco is going to have to think about its channel model and build a support network," he said.
He added that the business model for storage is different to that for networking, so the company will have to reinvent the way it sells to accommodate storage.
Mark Darvill, professional services director at Cisco Gold partner Logical, agreed. "There is more to selling Sans than just sticking a couple of disks at the edge of the network. Cisco will have to sign new partners and train existing ones to sell these products," he explained.
Cisco's existing networking resellers must learn how to influence a different set of IT buyers who are involved not with the network, but with the desktop and server environment, he added.
This will be more of a challenge for some resellers than for others. "Systems integrators should be able to add the new products to their storage ranges, but networking resellers will find it more difficult to make sales," said Darvill.
Cisco could become a leader in the connectivity aspect of Sans, Darvill claimed, but he warned that it will have a tougher task to break the stranglehold that vendors such as Hewlett Packard and EMC have on the storage market as a whole.
He said that as well as signing new partners it is important that Cisco carries out demand-generation and marketing to get its new message across.
But Clive Hailstone, general manager at Cisco channel development provider Computer 2000 (C2000), is confident that the vendor, supported by its distributors, has the skills and experience to support resellers with new technology sales.
"Cisco will do what it has done successfully with other technologies, and work closely with reseller partners to skill them up," he said. "There will be an accreditation over time, because Cisco will want to ensure that its resellers can support the products."
Taking on new technology is something the channel is used to, said Hailstone. "Resellers that want to work with these products will have to be retrained in the same way they have been retrained in IP telephony," he said.
He added that resellers are keen to get involved in San sales. "Some of our resellers are already looking at how to merge their enterprise networking and storage offerings," he explained.
Hailstone indicated that C2000 had spoken to Cisco to see how it can take this growth opportunity forward. "Companies like us are an obvious choice for Cisco, because we have an enterprise storage unit as well as a networking unit," he said.
Multi-disciplined distributors will play a key role in supporting resellers moving into the San arena by combining their storage and networking skills and resources to offer technical as well as sales training.
Andy Rolf, an analyst at Gartner, maintained that it is a good opportunity for Cisco's systems integrators already in the storage arena, but claimed that smaller resellers might struggle. "Cisco will have to sign storage-focused resellers," he said.
Research by Gartner suggests that the market for Fibre Channel San switching in EMEA will grow from $373m in 2002 to $1.3bn in 2006.
Rolf explained that Cisco and EMC could complement each other in the enterprise storage market. "EMC is more focused on systems and software, whereas Cisco comes in from the networking side," he said.
Keith Humphreys, an analyst at EuroLAN Research, suggested that Cisco must differentiate itself from the other players by using its channel.
"Cisco must have a different approach to bringing the products to market, because the others use original equipment manufacturers and this is not Cisco's forte," he said.