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Sun seeks channel change for the better with Partner First

Sun Microsystems' Partner First program opens up all but its 300 biggest accounts to indirect sales and Sun partners.

Sun Microsystems Inc. is opening its entire U.S. customer set -- excepting its largest national accounts -- to a 100% channel fulfillment model. And it is adding new support resources for Sun partners that serve more than one geography.

The new "Partner First" model covers "the entire market below our national accounts and is a significant shift in our coverage philosophy," Tom Wagner, Sun's vice president of North American sales, told

The national, "named" accounts will retain a direct-sales focus, although partners, such as large systems integrators, do play there, he said.

Below that line of named accounts, all Sun business will be transacted through partners. "[Those accounts] will be 100% partner-sold and -led," Wagner said.

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Wagner would not specify where that line lay, but a spokeswoman later said there are 300 such direct, named accounts in the U.S. Although Sun would not disclose what the dollar cutoff will be, several Sun partners briefed on the plan last week said direct accounts do $7 million or more in Sun business yearly.

Partner First will give all 600 of the company's PartnerEdge partners entry into this arena, which easily represents a $100 million annual opportunity, Wagner said.

Wagner acknowledged that Sun faces very tough competition in the targeted accounts from Hewlett-Packard (HP), IBM and their partner surrogates. Sun partners also said they face very tough competition from low-cost Dell servers in the field.

Overall reaction was positive. Partners and observers said Sun is saying the right things, but all of them also said they would watch execution closely.

"On paper this sounds really good," said Bill Calderwood, president of The Root Group, a Sun partner in Boulder, Colo. "If nothing else, Sun's making a dramatic statement on its commitment to the channel. On a case-by-case basis, each reseller may or may not benefit depending on their region" and expertise, he said.

Mike Clesceri, a partner with Laurus Technologies in Itasca, Ill., echoed that sentiment. "It's always encouraging when Sun talks about partners and moves more business through the channel. The effort has been fragmented and inconsistent, and under Tom's [Wagner] new organization, I'm very interested in seeing how this goes."

One longtime Sun watcher who asked not to be named said the company has struggled with its channel focus and has traditionally kept much more business to itself than, say, HP, which most see as the leader in server sales.

"Every vendor has direct-sales channel conflict -- Sun is not unique there -- but it's made some bad moves," this source said. "But this has really not been a case of HP or IBM kicking Sun's butt. Sun has been kicking its own butt."

Part of the issue is that Sun's roots are in big, traditionally pricey servers, so moving down market into smaller companies, where commodity, inexpensive hardware is king, has been a challenge.

"You've got to wait and see what happens. Sun has seen its ups and downs, but give credit where credit is due -- they've listened to partners and they're saying the right things," said IDC channel analyst Janet Waxman.

The idea of putting more vendor backing behind VARs with national coverage was embraced heartily.

Putting new coverage behind multi-presence VARs is a great idea, said Rob Wolfe, CEO of AvcomEast, a Reston, Va.-based Sun partner. "Taking those partners and properly supporting them in all their regions is really important."

Others agreed. "With a company the size of Sun, it's amazing how many different people we had to deal with [in different areas]. Now we'll have one person or team that will be incented to help our business both at headquarters and elsewhere," Clesceri said.

Despite the support for the Partner First model, some partners wince at parts of Sun's strategy.

"It bothers me that [Sun CEO] Jonathan Schwartz spends most of his time talking about products with zero or next-to-zero margin, i.e., the open source stuff," said another Sun partner who requested anonymity. "Sun should know that there's no shareholder equity in that. He should be talking about their incredible assets, Solaris -- not OpenSolaris -- and the Niagara chips."

These critics scratch their heads over such moves as Sun's $1 billion acquisition of MySQL, an open source database company, for example.

"I understand the notion of giving away the razor and selling the razor blade, but Sun is selling razors that are compatible with everyone else's razor blade," one partner said.

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