Friday, April 06, 2007

Market Power Corrupts...

I have read a number of stories recently about Cisco throwing its weight around. First, there was this gem at CRN describing how channel "partners" are viewing Cisco: 10 Things Partners Are Saying About Cisco. The summary: What partnership? It's a one-way relationship with Cisco as the master and the channel as the slave. While Cisco pits the channel against itself and retaliates when a partner proposes non-Cisco solutions, resulting in single-digit margins, Cisco pulls down 66% gross margin (per the 2006 annual report). What sort of partnership is that?

Hmm... not very inspiring if you're working in the channel.

This morning, I read this in Network World: Cisco looking to counter used-gear competitors. The summary: Cisco definitely wants customers paying top-dollar to buy new gear all the time. If you don't, you risk all sorts of issues even getting your other gear covered with SMARTnet.

In the end, we all know this is just about money... specifically, your money. The article quotes David Willis, chief of research at Gartner:

"You see the writing on the wall," Willis says. "The equipment lasts for five years or more; so how is Cisco going to get revenue? They're going to enforce license restrictions and they're going to keep you on their maintenance, and ultimately start charging you a lot more for software."

Hmmm... also not very inspiring if you're a customer. In fact, Vyatta has had a couple new customers tell us that they chose Vyatta when confronted with Cisco's stance on used equipment.

To paraphrase an old saw, 'Market power corrupts. Absolute market power corrupts absolutely.'"


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