VMware resellers wary of expanding channel ranks

VMware resellers wary of expanding channel ranks

An explosion in partner numbers is causing concern among VMware resellers. The virtualisation vendor now has more than 300 resellers listed in Australia including 79 Enterprise partners. A total of 11 companies have Enterprise status or above in SA and 15 in WA.

Resellers contacted by ARN had invested an average of $50,000 in training and certification. This figure includes the cost of getting two engineers qualified as VMware Certified Professionals (VCPs), loss of business opportunity associated with having people out of the field for training, and related travel expenses.

Southern Cross Computer Systems moved heavily into virtualisation last year because of customer demand but CEO, Mark Kalmus, expressed doubts about the sustainability of Enterprise partner numbers.

"If you don't do it [virtualisation], you are walking away from business but I personally believe 79 [Enterprise partners] is too many," he said. "A good number would have been 30-40 but people will drop off by osmosis." Clariti has been selling VMware for about three years but managing director, Bruce McCurdy, took the decision to become an Enterprise partner about 12 months ago to access the full product range. He said it used to be very difficult to attain that level of certification but now seemed to be open to everybody.

"They've done a good job building a channel but have probably gone a bit over the top," he said. "Most vendors do when they open up the model but this is a product you either can or can't do properly. Those who can't will be found out fairly early in the piece." The growth in Enterprise partner numbers is also a concern for Leading Solutions, which has been exacerbated by the vendor recently recruiting its practice manager.

"How can they expect to grow their channel business if they swallow the experts?" NSW manager, Roy Pater, said. "I'm also worried about the number of partners because they should be concentrating on building strong resellers. Otherwise, as soon as demand slacks off we will start to see price wars."

NetOptions has been an Enterprise partner for about two years, according to managing director, Clark Hobson. He said the rise in VMware partners reflected a trend for smaller organisations to embrace virtualisa tion. For example, NetOptions has implemented virtualisation for a mining company that has less than 10 servers.

"Some customers have been very wary of creating an environment they can't support themselves," Hobson said. "That was a negative aspect of virtualization for small, regional companies but more partners means those companies can see more options."

But with almost 80 local Enterprise partners, he suggested the model was close to being built out.

Accucom is a relative newcomer after signing up as an Enterprise partner with VMware about three months ago.

"Everybody is talking about it [virtualisation] and wants to know how it will save them money. So partners are jumping on the bandwagon," sales manager, Anthony Sarkis, said. "It was a classic fit for us because we were selling a lot of blade servers." XSI has been selling VMware for more than 12 months as part of broader storage solutions. CEO, Max Goldsmith, said everybody thinks they are a virtualization player these days and every storage contract was hugely competitive.

"Virtualisation has almost become a commodity product, which is a tragedy, but EMC in their wisdom have made it that way," he said. "In fairness, they have been quite clear that they want it to become a product everybody has like Microsoft." Local managing director, Paul Harapin, said the growth in channel partners reflected a growing acceptance of its products. He estimated global sales had jumped from about $US200 million in 2004 to more than $US700 million in 2006, with Q1 2007 up 95 per cent on the same period last year.

"Virtualisation has gone from being an interesting concept to something that must be done," he said. "It's also progressed from being about simple server reduction to an entire virtual infrastructure including disaster recovery, business continuity and virtual desktop."

Harapin didn't have a number in his head when he would stop adding Enterprise resellers but said they were approaching acceptable levels.

"Partners are pretty good at making decisions for themselves around where opportunities exist," he said. "The market will tell us when the number is right. If a partner wants to invest, we are more than happy to have them as part of the program." Southern Cross' Kalmus said the rapid expansion of Enterprise partner numbers was understandable given the current competitive landscape.

"They [VMware] probably think it is an easy way to get feet on the street and realize they will have growth problems when Microsoft gets its act together in 18 months or so. This type of opportunity doesn't happen very often in this industry so they are riding the wave while they can."

But Harapin refuted suggestions that he was making hay while the sun shines. "Within any growing market there are going to be companies trying to compete but I am not overly concerned because we have a great team and a stable product with more than 25,000 customers," he said. "We want partners that add value but need to ensure they all have a positive experience."

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