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Sun intensifies channel scrutiny

Sun intensifies channel scrutiny

Sun Microsystems is planning a significant reshuffle of its channel, effective July 1, which is aimed at "guiding" smaller partners to purchase products via "hub resellers" rather than buying direct.

The vendor will institute a similar model to the one run by its UK operation, with a smaller number of direct sellers and a larger number of second-tier partners. The partnership changes stem from a new shift to industry alignment rather than geographical alignment.

"We're going to be lining up our current partner base where they have complementary skills in particular industries, such as finance, government, telcos and so on," says Mike Wilson, national partner sales manager for Sun Microsystems Australia. "Except in the smaller states which by definition have to handle everything anyway."

Wilson admits this may see poor performers shed from the fold, however, the main objective will be a 20 per cent increase in the amount of Sun products sold through the channel, raising the bar to 70 per cent in total.

"We want to double the revenue of Sun in Australia within three years," he says, predicting earnings of $US1 billion if the vendor succeeds.

It's likely the role of Sun hubs will be assumed by the vendor's four platinum partners, in addition to select resellers. Frontline Systems, Fulcrum, AlphaWest (a Solution 6 Company), eServe, Com Tech and wholesaler Alstom IT are probable candidates, while other Sun partners are feeling slighted at being excluded from the invitation list.

"In this type of relationship it is important that the margins [are] transparent. Everyone has to be clear on who owns the customer and who is closest to the customer," says Paul Muller, managing director of integrator and solutions provider Solnet, who has already been down the consolidation path with iPlanet software.

"I would ask Sun if they have chosen partners who are really dedicated to the Sun product range and not merely high-volume resellers," he adds.

Alleviated from the concern of looking after resellers, Sun is expected to cut costs significantly under the new structure. The increased level of accessibility will also allow smaller resellers to profit from Sun opportunities that they wouldn't normally be able to pick up, according to Wilson.

"If a small guy doesn't have a direct relationship with Sun, they won't be able to do the occasional Sun job that comes up with an existing customer," he explains. "But by being able to go through the hub they are still able to do the business, Sun gets into a new account and the hub gets the business."

Muller agrees, saying Solnet's responsibility as an iPlanet hub is to recruit resellers and then look after them in the market. "A distributor can offer some product knowledge, but they can't tell you what the implementation issues are going to be," he says.

"They have no deployment experience, it is no longer good enough to throw a box at a customer, who are resellers in this case, and expect them to run it. Resellers are looking for distributors that can take a far more consultative approach, and with technology like this resellers are far better positioned to take that role."

"Frankly most of the resellers don't see much of a difference, the hub distribution system brings about improvements in the service levels. Resellers have the advantage of dealing with a distributor who has experience in implementing the product. The customer goes through a hub because they don't have the expertise in-house, and don't have the opportunity to access the training to get that expertise."

Some Sun hubs are concerned about the added infrastructure costs that catering to the "little fish" will inevitably incur, however Wilson says the benefits will far outweigh any burdens. "They [the hubs] wouldn't be doing it out of love, they'll be doing it because it's profitable for them," he says.

A blueprint for the new channel model is expected by early June.


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