VMware aims to reduce channel conflict between VARs, OEMs

VMware resellers can now avoid channel conflict by registering deals fulfilled through Dell, HP and other OEM partners.

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VMware has launched a new initiative to reduce channel conflict between VARs and original equipment manufacturers (OEMs).

When VARs register deals through select OEM partners, VMware will recognize them as the partner of record and provide opportunity protection.

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The new safeguard+ program helps protect partners' presales investments, said Ben Matheson, director of global marketing for VMware Inc. It also reduces the likelihood that a second partner will undercut the first partner's selling price when they have already invested time and money trying to close the deal, he said.

"[Safeguard+] should allow channel partners to resell OEM SKUs, and it should level the playing field," he added. "That's definitely the intent here. We want to lessen the amount of channel conflict."

Competition between OEM partners and resellers is fairly common in the VMware channel. The issue flared up last year when Dell Inc. made the decision to include the VMware ESX 3i hypervisor free with its PowerEdge servers, giving customers no incentive to choose VARs over Dell and creating complaints about channel conflict.

The safeguard+ program is a sure response to conflict between resellers and OEMs, said Marvin MacKay, sales and client relations director for VMware partner William Ives Consulting in Charlotte, N.C.

"Obviously resellers are very concerned about [OEM competition]," MacKay said. "I don't think [safeguard+] will decrease competition, but it should decrease conflict."

This new opportunity is a component of VMware's advantage+ program.

"Partners who are eligible for the safeguard+ benefit will not receive a front-end discount or back-end rebate for closing opportunities through a VMware OEM partner," Matheson said. "However, if approved for an opportunity, partners will receive opportunity protection, meaning no other VMware partner can claim advantage+ financial incentives throughout the 120-day registration period."

When VMware partners select their fulfillment channel on the advantage+ opportunity registration form, they can indicate whether or not they anticipate fulfilling a deal through a VMware authorized distributor or a select VMware OEM partner. Once VMware approves a deal, the partner can block other partners from receiving advantage+ benefits.

"The intent there is to make sure that someone does not swoop in and exchange revenue, or basically grab margins from the partner," Matheson said.

The participating OEMs are Dell, Fujitsu Siemens Computers, Hewlett-Packard, IBM and Sun Microsystems.

The program requires a minimum deal size of $2,995 for new customers or $10,000 for existing accounts.

MacKay said channel conflict is a concern for his company, even though he has not had significant problems with OEMs attempting to steal customers.

Jack Kaiser, vice president of sales and marketing at International Computerware Inc., said there has been channel conflict in the past, but it is not currently a huge issue.

"We don't really compete with the OEMs or seem to run into problems with OEMs selling our software," Kaiser said.

When asked if the safeguard+ benefit will help halt OEMs from stealing reseller customers, Matheson said it really depends on the individual customer. "Partners can influence how a deal will close, but ultimately the customer decides," he said. "Some customers choose to purchase VMware along with OEM servers. Others prefer VMware branded solutions."

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