Storage Vendors Cut Partners

Veritas and StorageTek believe a smaller, stronger corps of certified partners can generate more channel revenue than a larger channel. Both companies are committed to aggressively growing their indirect sales. StorageTek's president, chairman and CEO Patrick Martin says he wants to increase his company's channel revenue by 25 percent next year; Veritas CEO Gary Bloom says he, too, is looking to boost partner sales.

Nevertheless, the two storage vendors are actively pruning their respective channels, according to Bloom and Martin (who both, ironically, delivered the messages to hundreds of solution providers at GE Access' recent New Frontiers event while extolling the virtues of partnering with their companies). Bloom said his company is cutting the number of its certified partners to reduce in-house competition and channel conflict between Veritas VARs. Martin also told GE Access VARs that StorageTek will have fewer partners under its recently launched Total Channel Program. StorageTek says it is aiming for a smaller number of dedicated, high-performing solution providers.

Veritas has approximately 350 enterprise partners that generate 55 percent of the company's revenue. The vendor reduced its partner ranks from 900 to 350 last year, and the company still continued to generate more channel revenue.

"We saw a degradation in the implementation quality and the margin levels for our channel partners [prior to the reduction]," says Michael Sotnick, vice president of partner sales at Veritas.

This year, Veritas will continue to prune its partner ranks, which may bring the vendor to fewer than 300 VARs. But that strategy doesn't preclude adding new solution providers. "We're lowering the number of partners to improve quality, but that doesn't shut the door to adding new ones," Sotnick says.

Veritas is keeping its value business, based on complex enterprise products, like Veritas NetBackup, around a small group of top storage integrators in the United States that will be served by "value" distributors like GE Access. The volume business, which includes midrange products like Veritas Backup Exec, will go through "volume" distributors such as Tech Data and Ingram Micro.

StorageTek also found that the majority of its channel revenue was coming from a small group of highly skilled storage integrators. Therefore, the storage-tape company lowered its partner base from 205 U.S. solution providers last year to 175 this year. George Karabatsos, vice president of reseller channel sales at StorageTek, says the company is aiming for 150 certified partners by next year, while boosting indirect sales from 50 percent to 65 percent of StorageTek's total revenue.

Like Veritas, StorageTek plans to use distributors such as GE Access for a "two-step model" to reach new solution providers in the midrange space that are beginning to break into the storage space, Karabatsos says.

But StorageTek is being cautious about adding new VARs to its Total Channel Program.

"We want to make our brand more valuable," Karabatsos says. "There's a fine line between general-purpose computing VARs and specialized storage integrators, who we welcome."