Opinion
Think globally but act locally
By Kelley Damore
 If there is doubt in anyone’s mind that we are truly global, the latest snafus with Cisco’s product availability is yet another indication that something that happens in a remote village in China can have an adverse ripple effect on Main Street US.
According to Cisco, when factories in China slowed down their production, due to the steep and sharp global recession, factory workers were sent back to their remote villages. But when demand picked up, it proved difficult to entice these same workers back.
These small villages in China had a direct impact on a Houston-based VAR, INX. The publicly traded company detailed in its 10-Q that its product revenue was down 21 percent due to unanticipated product availability issues from Cisco. This is just one example of numerous VARs affected by the product shortfall.
CRN has seen and reported on product shortfalls and gluts throughout the past few decades. And Cisco wasn’t alone in regards to component shortages. HP, Dell, Apple and others, all had availability issues due to the problem. But according to channels, the delays were much longer for Cisco and the demand for Cisco rose more sharply than its competitors, so the problem was only exacerbated.
Certainly no one is going to blame Cisco for rebounding and being one of the first to recover from the downturn. This is all good news for the channel. The criticisms from VARs and distributors lie in the fact that Cisco did not communicate the scope of the problem to the channel while it was happening. Cisco couldn’t get specifics to its very own extended salesforce as VARs on the street were trying to placate their customers, and sell and cobble deals together in a difficult economy.
Open communication would have gone a long way. The business industry is littered with companies that failed to communicate their shortcomings and lost market share as a result. An acknowledgement from the top executives would have helped to clear up confusion and been a good first step. A public mea culpa six to nine months after the problem started at the Cisco Partner Summit in April was too late.
Where could this hurt Cisco now and in the future? Clearly in the small and midsize space. While it is a household name in the enterprise, SMBs rely on the VARs to make product decisions. If VARs can’t get Cisco networking gear, or information about when they will be able to get it, they are going to go elsewhere. And as we have seen with many Cisco VARs in US, they moved to Juniper, HP and SonicWall.
Furthermore, the gray market, which Cisco tries to keep tight control on, flourished during the crisis. This is all in a market of which Cisco wants a bigger piece. |