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As part of an overall effort to be more credible with solution providers that sell more than network gear, Cisco on Sept. 13 launched an industry partner network.

The new Industry Solutions Partner Network is similar in concept to other partner-to-partner networks launched by IBM and other distributors.

But as a point of differentiation, it provides margin incentives to partners that participate in the network in addition to giving top-tier Cisco partners access to a new virtual online community, called Cisco Partner Space, that Cisco is building to link end customers, software vendors and partners in a single online community.

The new online community, which is similar to the Second Life online community created for consumers, will initially focus on providing an easily accessible online destination for software vendors to make their marketing collateral available to Cisco channel partners.

The initial plan gives 30 software vendors the rights to post content on Cisco Partner Space and access to the network will be limited to Cisco Gold, Silver, Premier and Select partners.

But within the next two months Cisco plans to invite end customers to participate in the new social network, which in turn, said Cisco Senior Director of Worldwide Channels Marketing Andrew Sage, should give ISVs and Cisco channel partners the incentives they need to participate on the network on an ongoing basis.

In general, Cisco executives said the online network is a prime example of how next-generation Web 2.0 technologies are going to change the way vendors interact with partners by creating self-organizing networks of solution providers that have common interests around vertical markets and common areas of technology competence.

As part of the effort Cisco expects a fair number of partners to deploy Cisco Contact Extension software to link their customer support operations to the infrastructure that currently powers Cisco’s back-end customer support operations.

Sage said he expects that the new partner network will increase the number of certified partners in the Cisco channel by a factor of two while the average amount of bookings recorded by Cisco registered partners could increase three times over the $128,000 per registered partner that Cisco is seeing today.

“This is the first wave of an effort by our central marketing team where we are trying to create a better connection between our SMB partners and customers,” said Sage.

Cisco partners said that the Cisco incentives that are being provided by Cisco are crucial when it comes to making partner-to-partner relationships work on a practical level at a time when Cisco needs partners to drive higher margin solutions to offset the loss of margins of core network hardware sales.

For example, many solution providers were not making enough margins on product sales to make it worthwhile to share revenue with another solution provider, so they welcome the new industry partner network program.

“Before this, it just didn’t make a lot of financial sense to partner with another solution provider,” said Jim Kavanaugh, CEO of World Wide Technology, in St. Louis.