'Our channel strategy is not devious' - Cisco CEO

Partners now represent almost 90 per cent of Cisco's business, claims CEO Chuck Robbins in his Partner Summit keynote as he affirms the vendor's commitment to the channel

Chuck Robbins has told partners that Cisco does not have a "devious" strategy to take business away from the channel as it continues to redefine itself as a software company.

Cisco has been on a quest to drive more business through a subscription model. For its recent fiscal Q4, subscriptions accounted for 70 per cent of Cisco's software revenues.

At last year's Partner Summit, the vendor warned that partners will need to invest in new initiatives such as lifecycle services and subscription offers as part of the vendor's business strategy.

In his keynote to partner delegates at Cisco's Partner Summit 2019, Robbins admitted that there has been some concerns that Cisco is adopting a "devious" channel strategy as a result of the changes.

Robbins (pictured) told delegates that Cisco's partner business is the largest it's been for six years, and now accounts for almost 90 per cent of its total revenues - two per cent higher than last year.

In Cisco's recent full-year results, revenues hit $51.9bn, a five per cent increase on the previous year. That's despite Cisco closing divestments of two companies worth $2.6bn in revenues during the year.

This means Cisco's partner community produce around $46.71bn of Cisco's revenues.

"We said last year, and we've launched today, lots of CX (customer experience) specialisations for our partner community. We're going to do this with you. The reason we're so adamant about pointing out the percentage of our business that has gone through our partners over the last year is because there's this concern out there that we have some devious strategy. We don't. We want to do this together.

"And we may not be perfect this week, and we may not be perfect next week, but we will continue to work with you, listen to you, talk to you and we will continue to evolve in a way that works for both of us," he said.

The Cisco CEO said that one European partner CEO in particular, which he later revealed as Atea's group CEO Steinar Sønsteby, has been working with him to ensure Cisco's new strategy is aligned with partners.

"And I know this is one of the most complex transitions we've ever been through together, but we're going to make it work. We're going to make it work together," Robbins added.

Robbins began his keynote on the first day of the Partner Summit, which also happened to be his birthday, with a sobering evaluation of the macroeconomic factors that continue to bruise Cisco's global business.

The keynote echoed Robbins' 2018 speech at last year's partner summit, which was dominated by the theme of political and economic unrest and how it is impacting Cisco's business.

The vendor has faced huge problems in China as a result of ongoing US-China trade tensions. In its recent Q4, sales in China tanked by over 25 per cent with Robbins at the time claiming that Cisco is being "uninvited to bid" on contracts with Chinese state-owned enterprises.

Cisco's share price fell by as much as 10 per cent following its Q4 results as it downgraded its revenue outlook for the following quarter.

Earlier this year, Cisco moved some of its manufacturing away from China to minimise impact from Donald Trump's trade tariffs.

Robbins discussed everything from Trump's ongoing impeachment inquiry, to unrest in Chile and Brexit during the opening minutes of his keynote.

"As we look around the world right now… we are not immune to any of the dynamics that are happening. We have geopolitical dynamics that are happening. Obviously, right here in the United States, we have an impeachment investigation. We have a trade war with ‘check the box', particularly China. We have Brexit. We have dynamics in Latin America, we have the Argentina crisis, we have unrest in Chile. We have things happening all around the world. We have global GDP shrinking. At least that's the expectation for the next year or so," he said.

"All of these parameters are lining up and impacting how we think about our strategies and how we think about our business and our investments. We have to continue to adapt to change based on what's happening in the world, what's happening with our customers. And that is what we have attempted to do over the last few years.

"We embarked on this business model change and I know that when we embarked, and we haven't done it alone. It impacted everybody in this room."