Sun looks for clear skies ahead
The vendor has weathered the storm created by the dot com crash, but is it on its way back up? Sara Driscoll looks to the future
Sun has had a tumultuous time ever since the dot com crash. But recently the vendor has been making more noise, and despite some channel players believing its influence had waned, the firm itself has claimed it is back – brighter than ever.
Charlotte Selby, partner and alliances sales director at Sun, certainly thinks so. “We have had four quarter-on-quarter periods of growth and are well ahead of our profitability,” she said. “Also, our server market share is growing, so we are happy with our performance right now.”
Selby said one reason why Sun has improved performance is that is has shaken out its channel. She said 75 per cent of the vendor’s products go through partners and therefore this move was crucial.
“We hope that partners would say our products are the best they have been in years,” she said. “This is the biggest opportunity for us since the dot com boom.”
Peter Spreadbury, director of enterprise partners at Sun VAR SCC, agreed. “Our Sun relationship is very strong and recently we have shown very good growth,” he said. “It hasn’t always been like this. We only began our relationship with Sun about seven years ago and it slowed down a lot after the dot com crash. Now the market is maturing and we have played more and more with Sun, hence the good growth recently.”
In December, Sun launched what it called phase two – the reseller module – of the Sun Partner Advantage (SPA) programme, which is now going for global roll out.
Selby said the firm also launched an ISV module to the programme 15 months ago. “We are not trying to pigeon-hole organisations,” she said. “SPA is modular so that firms buy into each module at a time and can work through as many as they like.”
She said the programme is based around Sun’s product stacks: servers, storage, software and services. There are four levels: Membership level, which is for volume players, for which there is no real criteria for entry; and above that are the Associate, Principal and Executive levels.
“We are still grandfathering resellers into the programme, but they have mostly all signed up and become accredited into the right level now,” said Selby. “We have had some really positive feedback because we’ve made sure the more they invest the more they get back from it. In the past we had very separate environments for ISVs, resellers and integrators, but now firms do a little bit of everything, so we made sure they can run across the whole scheme.”
However, partners expressed mixed feelings about the programme.
Simon Welch, marketing director at Sun Channel Development Partner (CDP) Horizon Clarity, said: “The SPA programme has gone down well in the channel. Sun’s previous programme was good in fairness, but the SPA programme has raised the game to a new level, rewarding partners for focus, value and investment in skills with market development and the integration of Sun infrastructure.
“It has also seen Sun start to invest increased marketing funding through its better qualified partners, which will help to create pipeline and take advantage of Sun’s current product offering.”
Steve Cowlin, divisional director for Sun business at DNS Arrow, also a CDP, agreed that reseller reaction had been good. “Resellers have been very positive,” he said. “It gives them the opportunity to be recognised as specialists in their field of expertise and grow their Sun business around their core skills.”
Rob Tomlin, sales director at Sun Interface Solutions, said: “We are the newest CDP, but we have been brought on to create incremental business for Sun. Recruiting partners is our priority, and the SPA programme helps us do this.”
Other players were less enthusiastic about the scheme.
Greg Carlow, managing director of Sun reseller Repton, said: “We have joined the new programme and there hasn’t been many changes. We are still utilising the marketing and doing training on Sun’s new products, but in terms of the actually programme there are not many different things about it.”
Nigel Dunn, Open Storage business unit director at Bell Microproducts, which gained a Sun CDP agreement after the vendor acquired StorageTek last year, said the programme seemed to have the right motives. However, he added: “It has caused some confusion among partners. The aim of the scheme to reward value is very noble, but in reality it can be subjective rather than objective and this means there can be grey areas. Ultimately, the big players are always well catered for in such schemes – it is not so clear cut for those below.”
Spreadbury said SCC is an Executive level member of the programme. He said the programme was “heavy” because Sun required a lot of commitment from VARs. “The commitment from us to maintain our high level is substantial and the investment is high,” he said. “It is a Rolls Royce programme for what is a much smaller business than it was.
“We committed to achieving our high level, but getting there is tough. The hoops we have to jump through are probably more demanding than they should be. Sun is trying to control its channel numbers by keeping the bar high.”
Selby said she is not looking for a certain utopia of channel numbers.
“I do not want to limit the number of partners joining the Membership level,” she said. “We are always looking to recruit more partners, but not just resellers. We’re looking for organisations that add to Sun’s Intellectual Property – we want the right partners. We have about 800 at the moment and there is no maximum level, but I want it to be based around skills sets.”
She added that much of the recruitment is done by distributors. “We do believe that CDPs should help to develop our channel and part of that is recruitment,” she said. “It also includes helping with training and on marketing schemes.”
However, as revealed last week in CRN (CRN, 23 April), Sun still expects more shake up in its distribution channel. “I am very conscious of not being over-distributed in the market,” Selby said. “We want to consolidate our number of distributors. We believe that CDPs perform channel development – not just distribute – and we are currently under developed.
“You could say that we are over distributed, but this has come down a lot in the past 18 months. Previously we had eight CDPs; now we have five: Avnet, Bell Microproducts, DNS Arrow, Interface Solutions and Horizon Clarity. All of our CDPs carry our entire portfolio.”
She continued: “I do expect to see more consolidation, both naturally and through market acquisitions, and also through the ending of agreements. We will do everything very collaboratively. It will be a joint decision, but there will be some more shake up – there is still a bit more honing to do.
Most of Sun’s CDPs agreed that the vendor is over-distributed.
Welch said: “Working for one of the competing Sun CDPs, it obviously would be my opinion that Sun is somewhat over-distributed in the UK. However, Horizon Clarity’s focus is on value and not on what our competitors are doing.
“We have a significantly dominant market share in the UK, but are certainly not complacent. The market is open and the last thing anyone needs is large-scale pan-European distributors leading with discounted prices, which would inevitably erode margins, the consequence of which can only be a reduction in value add at the distribution level.”
Colin Robertson, UK country manager of Avnet Partner Solutions, said that since its takeover of GE Access – where Avnet gained the Sun relationship – things have been going very well. He sees the Sun business as a massive opportunity.
“We have been recruiting resellers, and there is a huge opportunity with them now that we are both IBM and Sun,” he said. “We cannot predict what Sun will do as it is bound to have its own agenda.”
Cowlin said: “Sun is over-distributed, especially following the recent acquisition of StorageTek. There are three distributors with the skills, focus and strategy to add real value for Sun and these pick up the lion’s share of the business.”
Dunn agreed. He said Bell and Sun had started with a “distant” relationship, because Sun acquired the contract through its StorageTek buy.
“Bell has sat awkwardly and has been prey to full-product CDPs,” he said. “But Bell has been in discussions with Sun to broaden the portfolio of Sun products it sells and these discussions are ongoing. Sun is probably over-distributed from the traditional products viewpoint, but under-distributed on the new x64 products. This is causing some inertia, probably due to the acquisitions and mergers within their CDP partners.”
Spreadbury agreed, and added: “In the classic Sun space, probably three distributors is enough. The challenge that Sun faces is that in the AMD/Intel space it has to grow share and the current distributors may not be suitable to do that. Sun may have the right number, but not the right mix.”
Tomlin said: “The biggest Sun CDPs probably do think the vendor is over-distributed, but from our point of view we are bringing in incremental business and if there is incremental business to be had then Sun isn’t over-distributed.”
While it seems Sun may be through the storm of the dot com crash, judging from its partners it may not be clear skies ahead just yet.