The 10 Hottest Emerging Opportunities For The Cisco Channel

Hot For Cisco

Cisco is and remains the networking plumbing powerhouse, and routing and switching still account for about 46 percent of its overall revenue. But as Cisco diversifies and continues to push out into what CEO John Chambers calls the "30 adjacencies" where Cisco can be a market leader, there is a host of emerging opportunities for Cisco solution providers of all stripes.

Here's a look at those opportunities -- some technology-based, others services-based, and others market segment-based -- that could define the Cisco channel of tomorrow.

Data Center

Cisco's second fiscal quarter earnings were less-than-inspiring for a discussion of switching and routing. But Cisco's big data center bets -- the Unified Computing System chief among them -- are paying off for the networking titan, and data center virtualization grew 59 percent year-over-year, with 700 percent year over year growth for UCS itself.

Cisco VARs have lined up behind UCS, and as Chambers put it, "There hasn't been a new hardware player in the data center for decades, and contrary to all prognostications, we are breaking away there. We have very much established ourselves."

Cloud

To Cisco, the promise of cloud computing means a role for solution providers in three loosely described categories. According to Edison Peres, senior vice president, worldwide channels, partners will be "cloud resellers" -- those VARs who build cloud-ready infrastructure through converged networking, data enter and virtualization, and resell managed service provider services. Or, they'll be "cloud builders": Larger systems integrators who can build out private enterprise cloud infrastructure using MSPs and a full complement of hardware and software resources. Or, they're "cloud providers" -- the MSPs themselves.

"The goal here is that all of these possibilities are going to be there," Peres told CRN.

Video

Whether it's the collaborative possibilities of Cisco's WebEx platform, the midmarket-focused Tandberg desktop gear, or the highest of the high-end TelePresence systems, it's Cisco intention to attack video -- and the lucrative sales possibilities of video -- from all sides. Cisco's Collaboration group, which includes the video portfolio and what Cisco acquired with Tandberg, grew 37 percent year-over-year during Cisco's second quarter, and is nearing a $4 billion annualized run rate. VARs and distributors have tipped their hats to Cisco's deft handling of the Tandberg integration, as well.

"Video is the next voice. It's going to be how we communicate," Chambers said. "Video will have much more cost justification whether it's entertainment or productivity, whether it's how you enable a collaboration, how you enable virtual organizations together, [or] whether it's just permitting you to travel halfway around the world."

Small Business

VARs and distributors will finally admit it: Cisco's got real momentum in small business, thanks to a combination of segment-centric products and services, a stronger-than-ever SMB VAR program, and aggressive financing. With the sub-200 space alone representing a global $8 billion addressable market opportunity, according to Cisco's Rick Moran, Cisco is doing everything it can to enable more SMB sales through the channel.

"Going back three years ago, I think there was still a lot of confusion, or fear, about incorporating Cisco into a small business solution," said D&H Distributing co-president Dan Schwab. "People thought that it was too expensive, or that it was overengineered, or they weren't authorized, and a lot of those barriers have been brought down now. It's resonating with the partners."

Security

Is Cisco about to make a major play in security? Sure seems like it.

With Chambers himself expounding about the need to solve security problems in the network, to Cisco Security Technology Business Unit chief Tom Gillis telling RSA attendees "it's time to rethink the entire system," Cisco clearly has security on the brain.

"Security in and of itself can cause a huge upgrade cycle," said Chambers. "It's an architectural play if we're right on that."

Services

Make no mistake: Cisco wants its partners to grow their services businesses. Chambers expects that most partners will outpace Cisco's own services growth, and Cisco's Peres says most VARs average a 50-50 mix of products and services, while that ratio was more like 75-25 three years ago.

"Unlike our peers that we're competing against, I would expect partners to generate five, ten times the services revenue we do, even though we're all needing to move to a services-led sell and services-led implementation," Chambers said.

Cisco's recent acquisition of Pari Networks should serve to enhance its services deployment that much more, said Karl Meulema, senior vice president of global strategy and operations for Cisco Services.

"You can't have a smart service unless you have intellectual property in that service," Meulema explained. "[We're] moving from a reactive to a much more proactive stance."

Health Care

Health care is a hot-and-getting-hotter vertical market anyway, and Cisco intends to remain a major player among networking and infrastructure vendors in the space. It offers specialized products, including Cisco HealthPresence, already, and according to Edison Peres, Cisco will start training solution providers with a greater emphasis on vertical practices.

Health care is one area where Cisco VARs have lots of opportunity...

Education

...and education is another, said Peres.

"They have to really continue to evolve in the areas of architecture and verticals," Peres said. "Education is becoming top of the list."

Networked Physical Security/Digital Signage

Among the niche technology areas Cisco's SMB and midmarket solution providers can play, physical security and digital signage are both rapidly coming to the fore, and Andrew Sage, vice president, small business and midmarket sales, noted "increasing conversation" in both areas. Makes sense: both are endpoint-centric market niches, but with video surveillance equipment and digital displays running off of IP networks, their viability as need-to-have networked devices is increasing.

Smart Grid

Smart grid, as a market segment play for solution providers, is still in its infancy. But Cisco's made it abundantly clear it intends to play and play hard in a market adjacency that Chambers has said could represent a $20-billion-a-year market opportunity. Cisco has already acquired and partnered heavily in smart grid, and Chambers says it's indeed the next big thing.

"I'll talk about the very top of our big bets, and I'll separate them into categories," Chambers said, referring to how he'll talk about market opportunities at the Cisco Partner Summit. "Small to medium business, IP NGN, Borderless Networks, and then the next generation, data center virtualization, video, and the next generation after that, clouds and what we're doing with EMC, and the generation after that, smart grid."