NetApp offers partners margin protection

Storage vendor to wind up mid-market partner recruitment to protect dealer margins

Storage vendor NetApp is winding up its channel recruitment activities in order to protect partners from margin erosion.

The vendor has added more than 1,500 partners across Europe over the past two years as part of its mid-market growth strategy.

Speaking exclusively to ChannelWeb, Julie Parrish, vice president of global partner sales at NetApp, explained: "We made an effort to recruit partners that focus on the 100 to 1,000-storage-user market and launched several new products to provide the right performance and pricing for this market."

Parrish said the firm's efforts have been rewarded with an uptick in market share. "On a global basis, we are pretty much gaining share everywhere and if you track that over the course of the last six or seven years, that has increased from seven to 16 per cent.

"Meanwhile, EMC have maintained steady at 30 per cent and some of our other competitors are going in a different direction."

Despite this, the firm is now curtailing the partner recruitment phase of its mid-market strategy to safeguard partner margins.

"We are in a very good margin position with our partners, compared with our competitors," said Parrish. "But the danger is if you over-recruit, you over-distribute the product and that is the number-one cause of margin erosion."

Instead, the priority for NetApp is working with its existing partners to trap more mid-market business via the launch of training and enablement programmes aimed at its bottom-tier Silver Partners.

"We find there can be a big gap between when a partner signs up to join the programme and when they start ordering products because of how comfortable they feel with the technology," said Parrish.

"So, we introduced the Silver Acceleration Programme, which is run through distribution, to walk them through the technology, assist them with pricing and make sure they understand how to be successful in that market."

Unlike some of its competitors, NetApp has no immediate plans to follow up its mid-market growth with a push into the SMB space.

"One of the core strengths of our product line is our ONTAP operating system, which provides users with a lot of features and functionality, and it would be very difficult to take that apart and make it smaller and more manageable for the SMB market," said Parrish.

"We would never say never, but below 100 users has never been an area of focus and feel we are better positioned to grab share by focusing on the mid-market."