Nortel Networks has updated its channels program in Europe, the Middle East and Africa (EMEA), it announced on Tuesday. It hopes to sign up new partners that sell to smaller companies and increase the amount of business it does through its big resellers, it said.
It's the first broad shake-up for Nortel's EMEA channel since 2001. Last year it did some market research and much "soul searching" to figure out how to improve the program and grow its EMEA business faster than the market as a whole, said Rob Shervill, Nortel's head of channel strategy and support for the region.
In the small to medium-sized business (SMB) area, Nortel is making it easier for channel players that target businesses with less than 250 employees to join its partner program by reducing the level of investment and accreditation they require, Shervill said.
It is also offering them service packs, training and support, and plans to expand its product offerings for smaller businesses, he said.
Nortel sees SMBs as a fast-growth opportunity. It launched an IP-based (Internet Protocol-based) communication system for small businesses last year, called Business Communication Manager 50. It also has Ethernet switching products for SMBs and plans to offer routing switches for them later in the year, Shervill said. It also targets smaller customers with firewall and wireless LAN products.
Over the past few years the company has surrendered its number-two slot in the networking market to Hewlett-Packard and had to do something dramatic to halt the decline, according to John Chapman, a business development director with IT Europa, a research company that specializes in European IT channels.
"They have obviously identified the SMB sector as an area of growth where they can recover their position," he said.
If the company follows through on their initiatives it has the brand name and presence to be a major partner for the channel, according to Chapman. "However, their recent arms length channel management strategy does not augur well. They need to use the new programs to get close to their partners and experience what is really needed in the SMB channel," Chapman said.
HP also competes with Alcatel, Cisco Systems, 3Com, Avaya and others.
Adding more SMB partners is one thrust of the new channel program, which Nortel calls Accelerate. The other is driving more business through its existing big partners, which include British Telecommunications and Affiniti.
To do this Nortel is offering bigger financial rebates for partners that achieve certain sales growth targets. The targets are negotiated individually and depend on factors like the types of products the partner sells and historical trends.
"We're not saying you have to double your [sales] numbers; the targets are individually negotiated. But if they beat that number they get a rebate, and when they start hitting 20 percent growth they'll get a 20 percent rebate," Shervill said.
The changes don't alter the overall structure of Nortel's partner program, and investments partners have made in accreditation and other plans are still valid, he said. "Everything's in place, it's just a question of exciting those channels," he said.
Nortel has about 500 to 600 registered channel partners in EMEA, a figure that has stayed roughly constant since 2001, Shervill said.
Nortel grew its EMEA revenue by 15 percent for the first nine months of last year, to US$2.1 billion, according to a filing with the U.S. Securities and Exchange Commission. That compared to 5 percent growth in the U.S., which is its biggest market, 11 percent growth in Canada and 32 percent growth in Asia Pacific.