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Cisco Cuts Dell Relationship

The rift with Cisco isn't the first for Dell. HP said in July that it plans to stop selling Dell hardware.
Little more than a year after Dell Computer launched its networking business, the company has run afoul of its former distributor, Cisco Systems. This month, Cisco will stop selling its networking equipment through Dell, unless Dell specifically authorizes the transaction. All distributor transactions will cease in October, ending a four-year agreement between the two companies.

Neither has provided a specific reason for the split. Dell says Cisco notified the company by phone Aug. 15 that the networking-equipment maker was ending the relationship. During the past year, Dell has steadily added to its own line of networking products. In late June, for example, the company introduced two managed network switches for companies that need to provide high-performance connectivity to servers and high-speed network backbones.

Dell's networking products are all Layer 2, fixed-port Ethernet switches, designed primarily for small and medium-sized businesses. This means they primarily play in workgroup or departmental LANs, says Kim Crawford, general manager of Dell Networking. Two-thirds of Dell's networking sales are for existing networks in which Dell is displacing another networking vendor, such as Cisco, Crawford said during a July interview at Dell's Austin, Texas, headquarters.

Dell is applying its direct-sales model to switches. Crawford said Dell welcomed a price war in the networking market. "Dell has done well by cutting costs in PCs and servers, why not networking?"

Where Dell's networking equipment doesn't meet its customers' needs, the company will sell technology from Extreme Networks, Nortel Networks, and Enterasys Networks, a spokeswoman says.

The rift with Cisco isn't the first time this summer a major partner has cut ties with Dell. Hewlett-Packard said in July that it plans to stop supplying printers, cameras, and scanners to Dell after getting wind of the company's intentions to sell Dell-branded printers.