Sun Pushes Partners Into Two-Year Deals

Sun Microsystems' iForce is gone, but not its channel program. Under the new moniker Sun Partner Advantage Program, the IT powerhouse is looking to the channel to help it enter new markets with new products.

"It was decided that it was time to look at all the partner programs worldwide and develop an new umbrella branding that could be used to promote Sun's value-added partners and their unique capabilities," says Mike Walsh, director of U.S. partner communication at Sun.

But there's a catch. Partners no longer have the option of annual renewals. Beginning this month, half of Sun's partner community must renew with two-year agreements with one of Sun's two master distributors, GE Access and MOCA. The other half will enter the expanded contracts this time next year. The change is designed to minimize the distraction of continually being pitched by distributor salespeople to change suppliers.

"This removes all of that activity that went on all the time and allows us to focus on growth," explains Bill Cate, director of Sun's U.S. partner program office.

It also removes an annual opportunity for resellers to wheedle a little margin out of competing distributors, but VARs seem content with the change.

"I think that's a nonissue," says Mike Shook, president of Cary, N.C.-based integrator Strategic Technologies (STI), citing his long and deep relationship with GE Access, which acts as a backroom extension of his business. "The notion that I'm going to bypass my historical knowledge of how we work together and change master resellers because someone gives me another point, that's a nonissue for me. And people with strong relationships with MOCA, why would they leave?"

Rather than straight percentages based on volume, the new program rewards partners based on where they sell and what they sell, says Jeff Barteld, director of U.S. channel sales for Sun. The new program is designed to reward sales that include integrating a high degree of Sun intellectual property into a solution rather than simply moving boxes.

Sun resellers who bring in new accounts or revive dormant accounts in the midmarket--Sun's sweet spot for indirect sales--will also be rewarded with account protections and a 10 percent discount for up to six months for those sales.

However, VARs who don't meet Sun's sales targets now get lower rebates.

"They're trying to make it clear to resellers that hardware margin is not the future," says Gary Grimes, who retired in 2004 as head of Sun's channel program. "Resellers need to be more value-add or solutions-oriented."

Almost no one likes forced change, but Sun VARs were intimately involved in the latest partner program revisions, so there should have been few surprises.

"Obviously, change is difficult," says Mark Reed, Sun VAR council member and president of Enterprise Consulting Group, a full service IT infrastructure solutions company based in St. Louis. "Anytime you take something away someone is accustomed to, there's going to be some hand wringing. But Sun did an excellent job of restructuring, so there could be some win-wins."

But Shook, Reed and other VARs who have hitched their wagons to Sun's star say they think they can make the new relationship work. If you run a Sun shop, you'll try almost anything to move your vendor back to the glory days of the dot-com bubble, they say.

"Sun needs to get profitable," Shook says. "And we think if we leverage the programs we have and grow our business, there will be very little reduction from what we used to have with the MDF program."