Dell EMC Still Working On Final Rebate Structure, Partners Fear Rebate Reductions

With just three weeks until Dell EMC unveils its new unified channel program, a high-level source says the company is still working on the new rebate structure, even as partners are bracing for reduced rates.

Calling the new Dell EMC Partner Program "a work in progress," a source close the process told CRN that the company has not yet established a new rebate structure for partners, but expects to share details beginning Dec. 15, allowing about six weeks for partners "to model" around the program's new parameters before its official launch Feb. 1.

"We know we won't please everybody, but we're clearly trying to get it right," the source said. Among solution providers, Dell's program was considered more profitable than EMCs, but EMC's program was considered simpler and more predictable.

Related: Partners Predict Sales Conflict As Dell EMC Removes Quest Software From Its Channel Program

"We are genuinely trying to keep the best of both programs going forward," the source told CRN. "We're consciously trying to give the best of the best, and where there's a jump ball, we're trying to be pro-partner."

"We believe Dell partners will be pleased with the programs and terms of the Dell EMC Channel Partner Program when announced in December," Dell said in a statement to CRN.

Partners, however, say it is doubtful that the new unified program will bring the robust incentives that Dell partners were accustomed to under the Dell program.

Dell rebate incentives were consistently 5 percent and could reach as high as 10 percent for solution providers that took advantage of all benefits, while EMC rebates ranged between 1 percent and 4 percent, according to partners.

"We don't believe the rebates will be as rich going forward," said the top executive at a Dell EMC solution provider. "All of your traditional Dell partners are running as hard as we can to maximize this last quarter of the rebate."

The solution provider executive said Dell EMC had been tight-lipped about future rebate levels. "It's a wide gap between [rebate levels in] the EMC program and the Dell program," said the solution provider executive, noting that EMC's back-end rebates had been steadily diminished in recent years. "We're expecting something in the middle, but even that would be less than what Dell partners are experiencing today. How they handle this is going to set the tone. It’s like Trump announcing his cabinet. We'll know a lot about what his presidency is going to be like by who he appoints."

Other recent changes, though – including removing Quest from the program and eliminating fourth quarter rebates for sales of legacy software products after the sale of the Dell Software Group – raise more questions about the potential bottom-line impact of the unification of the company's channel program, some partners say.

A top executive at a large solution provider that works with Dell EMC wondered if the vendor might make cuts to its rebates and other benefits in the closing months of the year.

"EMC was on the calendar year, so was VMware. The new Dell EMC fiscal year begins Feb. 1, so what are they doing with January?" the executive said. "What happens if you're trying to hit a bar to get a benefit? Are they going to stop putting money in marketing that month? Are they going to stop paying rebates that month? I don't know. My guess is they're going to put a squeeze on to some extent."

Dell EMC recently began notifying partners that Quest software products would not be available through the Dell EMC channel program, but would be resold by Dell EMC direct sales teams. This set up what one partner called a "politically tricky" scenario where Dell EMC partners that sign on with Quest could find themselves competing with their primary vendor for that business and potentially souring relationships with both vendors.

Dell EMC has also told partners they won't get Q4 rebate payments on sales of products offered by the former Dell Software Group. Dell EMC closed the sale of its software unit to Francisco Partners and the private equity arm of activist hedge fund Elliott Management in early November.

The sale helped offset the cost of Dell's $58 billion acquisition of EMC and did away with software product overlap created by buying EMC, which sells some similar software lines including data protection solutions.

Dell EMC is aiming to launch a single, integrated channel program known simply as the Dell EMC Partner Program. Channel Chief John Byrne has promised the program will protect partner deal registration, set realistic sales targets, as well as simplify and automate the rebate process. He hasn't spoken publicly about rebate levels and other financial details.