Cisco has hit back at critics who claim that the company has misjudged the market and has had to cut prices of its range of SAN products to compete. A report from New York-based investment bank SG Cowen said that the company, which only entered the SAN market earlier this year, was finding it tough going and had already resorted to price cuts from what had been seen as premium pricing. The bank noted that IBM had cut its prices twice since agreeing the partnership deal with Cisco and that the price of the entry level MDS 9216 had fallen 44 percent since the original deal had been agreed. But Bernard Zeutzius, EMEA product manager, Storage Area Networking technologies said that the pricing policy was a matter for partners and had nothing to do with Cisco. “We’ve agreed our pricing and what our OSMs (original storage manufacturers) charge is up to them.” He added that any price cuts would eat into the margins of the partners not Cisco. He didn’t know whether there had been any attempt to renegotiate the prices that Cisco’s partners were paying. “That’s something that’s discussed at the corporate level.” He acknowledged that there had been some criticism of Cisco’s pricing but claimed that the critics were not comparing like with like. “You have to compare apples with apples,” he said. “We are offering a whole range of intelligent services with this platform; the list of features that we’re providing are just options with our competition” As one example, he pointed out that users whose systems were growing could replace a blade within a chassis if they had outgrown the original switch. But there are other features too; “Every single MDS chassis has embedded traffic analysers – that really helps our customers a lot.” Whether Cisco’s arguments will hold water with users remain to be seen. Brocade and McData have also recently seen price cuts and the market is expected to get really competitive. Zeutzius is relaxed about Cisco’s position. “We’ve already signed 15 major customers in Europe. I’ve not seen too many problems with our pricing.”
Cisco hits back over 'premium pricing' claims
Cisco returns fire after claims that it has been charging too much for new range of SANs.