Cisco Picks ScanSource to Advance Distribution Strategy

Cisco Systems penned a deal with ScanSource, a Point of Sale and data capture specialty distributor, opening it to thousands of manufacturing and retail VARs, an underserved market for the network vendor.

The pick-up, the second distribution deal in as many years for Cisco, opens a second front in a planned three-front distribution strategy to bring Cisco to un-reached customers, Cisco executives told ChannelInsider.

The deal gains access for Cisco to thousands of retail and manufacturing customers, both underserved verticals the vendor said, to be reached by ScanSource VARs who specialize in POS and data capture solutions respectively, Cisco and ScanSource executives said. Both sets of VARs typically send the infrastructure business of the solution to other VARs or distributors, Scan Source said.

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“The goal is to reach new customers by leveraging niche distributors who have a special strength around a technology where we can accelerate growth in key advanced technology markets,” said Julie Hens, Cisco’s Senior Director of U.S. and Canada Distribution.

The first front of the strategy, to reach underserved market segments was launched in 2005 when D&H Distributing began carrying Cisco to reach the SMB market, and the third front, to reach underserved geographies through distributors, has yet to arise, Cisco said.

No geography expansions have been identified in the U.S., but Cisco may expand on the first front with the likes of “government or service provider distributors,” hens said.

For the distributor’s part, it gives ScanSource’s VARs one stop shopping to add the infrastructure piece of the pie, said Mike Baur, Chie Executive Officer of ScanSource

Most of the company’s resellers sell IBM or NCR POS systems and add their own software, but send infrastructure business to another VAR or try to get from another source and support then find trouble supporting it, Bauer said.

“Customers want one-stop shopping and so do VARs,” he said. As technology gets more complex, one source for procurement, service and support, becomes more important.”

Scansource did $1.49 billion in revenue in 2006 through its five business units, including ScanSource, Catalyst Telecom, Paracon, T2 Supply and ScanSource Security Distribution.