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StoreVault signs deal with reseller CDW, VARs question move

To gain more exposure for its S500 product, StoreVault is tapping reseller CDW to advertise its product through its Web site and catalogs, but StoreVault VARs raise concerns.

StoreVault, a Network Appliance Inc. division, has inked a deal with CDW Corporation to sell its StoreVault S500 storage product to customers that buy through Web site and catalog advertising, but StoreVault resellers are concerned that the new deal may affect their selling strategy.

Under the terms of the agreement, CDW will add a new selling component to the StoreVault S500, which will entail advertising the product online as well as through its catalog. Customers can buy directly from CDW, which will not publish the street price of the product in ads to protect StoreVault's 400 other resellers' ability to charge in relation to their integration work. Instead pricing is available directly from CDW.

The StoreVault S500 is an all-in-one storage system tailored for SMB customers. Among its features, the box scales up to 6 terabytes (TB) of storage and has network-attached storage (NAS), Fibre Channel and iSCSI compatiability. In analyzing customer buying patterns since sales began, Sajai Krishman, general manager of StoreVault, said the StoreVault S500, has the potential to attract two types of buyers among small to medium-sized businesses (SMBs), which is where the product is targeted.

There are, Krishman said, smaller medium size businesses that are relatively new to network storage and are exposed to the technology through resellers who are near to the customer and can hold their hands through the installation process. Other more sophisticated customers want to choose products by looking through catalogs and comparing products on the market for themselves, rather than depending on VARs for advice.

Krishman said he believes his company has missed many sales opportunities, and has chosen to go with CDW to capture customers that buy direct from CDW instead of going through a reseller.

"Frankly, there are plenty of businesses where the customers just are not aware of our product. I'm absolutely sure that we've missed out on a lot of sales opportunities in the first eight months, but that's the nature of the beast," Krishman said.

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Based in Vernon Hills, Ill., CDW is a large direct market reseller, and resells a significant amount of iSCSI products which Krishman hopes customers will pair with the S500 product.

According to Gavin Rosenberg, sales and marketing director at StoreVault reseller Sunstar Company Inc. of Inglewood, Calif., the deal can potentially take business away from his firm.

"I don't like it because that gives another player in the field significant access to a product that did not have access before," Rosenberg said. "If I bring a deal to the table and I register the deal I should have nothing to worry about. I will worry if a potential customer goes to a player like CDW looking for a competitive quote. CDW might turn them onto a competitive product," Rosenberg added.

Forrester Research Inc. analyst Stephanie Balaouras doesn't think StoreVault's VARs have anything to worry about.

"SMBs who might be a little bit more sophisticated and might need an entry-level solution can just order it themselves. I don' t think they will necessarily compete with VARs because I think the larger the SMB, the more likely they are to continue to buy directly through a VAR," Balaouras said.

Michael Maddox, president of StoreVault reseller Application Specialist Kompany of Mason, Mich., said the deal makes sense because CDW gives StoreVault exposure to geographies where they just don't have channel relationships. Still, Maddox said, the product was not designed to be a commodity and is technically a product that involves a lot of decision criteria much more than price point. He also noted there is a risk of price dilution.

"If the impression gets out to the marketplace that this is a commoditized product, I can go to CDW and just order it and put it in, that's going to be a dangerous impression because its not that way," Maddox said. "When you commoditize your product you take your value-added resellers out of the mix, and you're left with resellers that are basically order takers and that does not fit the S500 very well," Maddox added.

Let us know what you think about this story; email: Nicole Lewis, Senior News Writer.

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