Motorola Renaissance? Partners Tout Tighter Focus, Better Incentives Since Moto Split8:32 AM EST Fri. Sep. 09, 2011
It's been nine months since the former Motorola split into two companies and Motorola Solutions Inc. -- the enterprise-focused networking company where most of Motrorola's channel-centric business resides -- began the tricky task of defining itself.
Fast forward to the present, however, and Motorola solution providers say the split's been a net positive. Not only is Motorola Solutions is growing its channel business with a tighter focus on partner profitability, but there are now sales incentives for VARs and channel programs that make sense to partners looking to grow with Motorola.
"I see it moving in the right direction," said Rodger Jenkins, president and CEO of Excalibur Integrated Systems, a Chattanooga, Tenn.-based solution provider. "You're not going to change Motorola in a day, but I see and hear plenty of things going on, and right now I'm cautiously optimistic."
Jenkins' tone was echoed by a number of Motorola solution providers contacted by CRN in recent weeks. With Motorola's 18-month old PartnerEmpower channel program starting to bear fruit and the company pushing forward on more favorable deal registration terms, Motorola Solutions' channel story is seen as stabilizing -- even as Motorola, the company brand, absorbs so much change.
Daniel Nettesheim, CEO of Barcodes Inc., a top Motorola partner based in Chicago, said that Motorola Solutions' focus on channels is more apparent now than ever.
"I see a refocus on leadership in North America, and I'm in a lot better touch with the senior leadership now that they're not wrestling with the distraction of the split," Nettesheim said. "Pre-2011, the senior management group was less available. Now, I'm spending time with them every quarter, and [Motorola] is here training twice as often as they were last year."
It's been a transformative year for the company. Following its split from Motorola Mobility, now in the process of being acquired by Google, Motorola Solutions became a roughly $8.5 billion company that did 66 percent of its business in the public sector and 34 percent in enterprise, as of the fourth quarter of 2010.
In its most recently reported results, for the second quarter of 2011, Motorola Solutions posted sales of $2.1 billion -- a 6 percent increase from $1.94 billion in the year-ago quarter. Government sales were $1.3 billion, up 4 percent from Q2 2010, and enterprise sales were $747 million, up 11 percent from Q2 2010.
Structurally, Motorola hasn't stopped changing. In April, Motorola Solutions completed its sale of wireless infrastructure assets to Nokia Siemens Networks, capping off a planned deal that was in the works long before the split.
In August, Motorola Solutions confirmed it would sell its two wireless broadband networking units -- Orthogon, or Point-Point Wireless Broadband, and Canopy, or Point-Multipoint Wireless Broadband -- to Vector Capital, a private equity firm that planned to combine the units into a single company called Cambium Networks. Under the agreement, Motorola will continue to buy from Cambium products for the public safety and federal government customers it supports directly.
But for solution providers, the structural changes to Motorola's channel program -- criticized by partners for not providing better incentives and deal protection for its best performers -- have been the biggest reason to bet big on a slimmer Motorola Solutions.
NEXT: Motorola's PartnerEmpower Program
In North America, Motorola Solutions has about 2,500 partners, according to the company. Its goal, as described by Motorola executives during a visit with CRN earlier this year, is maintaining a 10 percent compound annual growth rate (CAGR) in its North America channel sales.
The seeds of that channel growth were sewn before the split. Back in March 2010, what was then Motorola Enterprise Mobility Solutions overhauled Motorola's channel program to a points-based system that compensated solution providers based on their success in volume sales, customer satisfaction and vertical expertise.
The points in that PartnerEmpower program determine their partner levels and were also awarded based on how partners were specifically selling Motorola products and services.
"Everything in this program is about helping partners differentiate themselves," said Mark Kroh, vice president of global channels at Motorola Solutions. "We're differentiating the partner and having them create their own identities."
PartnerEmpower is organized into different tracks reflecting Motorola Solutions' various channel businesses, and Motorola's plan was to phase in those tracks over an 18-month period. Radio Solutions and Mobile Solutions, for example, were announced last fall, and cover partners that sell Motorola's two-way radio, RFID, mobile computer, bar code scanning and other product sets, including the legacy Symbol business. The Wireless Network Solutions track has been live since PartnerEmpower started, and as of September, both the Mobile Solutions and Radio Solutions tracks are live.
"Partner benefits are individually defined," Kroh explained. "It's better to do it that way than just choosing price. They can move up the chain in terms of technical specializations and have access to MDF, product and other benefits."
Also available is PartnerEmpower's first market specialization, which debuted this year and reflects what Kroh described as a way to organize Motorola partners around vertical market-based competencies in addition to their technical competencies. The first one is U.S. Federal Market, and more are coming, according to Motorola.
Kroh and Motorola also confirmed that the company has cut a number of underperforming or non-participating Motorola Solutions partners. Kroh declined to provide exact numbers but said it's a part of Motorola getting more strategic with its best and most loyal solution providers.
"We're going to have more active partners in the program," Kroh said. "That may not mean having more total partners, but more partners that participate in the program in an ongoing basis. The reason is, they have a reason to be part of the program beyond just getting a point or two difference in pricing. We will have the right partners at the end of the day."
NEXT: Partners Thumbs Up For Deal Reg Changes
Motorola partners said one of the big key changes made by Motorola Solutions this year was a revamp of its deal registration process. Earlier this summer, Motorola lowered the threshold on its deal registration program and changed the deal registration financial rewards to line up with points awarded in Empower.
The exact deal thresholds to qualify vary depending on Empower partnership levels. But Motorola lowered the requirements to participate in deal registration by an average of 55 percent across Empower's various tracks, according to a spokesman, and the number of partner requests to use Motorola Solutions' deal registration has tripled since then, with more requests logged for the program in the first two months of the change than in all of 2010.
Because of the breadth of Motorola's partner community, even its established VARs have trouble protecting deals if all their competition comes down to price wars, said Excalibur's Jenkins. That explains why the deal registration changes have been so warmly received.
"I would like to see them bring more of that to the table," Jenkins said. "A deal reg that gives me a 15-point or 20-point advantage is something that allows us to do our job with confidence. I've got to look at my margins and my overhead and expenses, and that's all stuff you can't cover with just two or three points of margin."
"Frankly, we have a great-set up with Motorola Solutions being one of their big partners already," added Barcodes' Nettesheim. "But I do believe when you have solution partners versus people just pushing out mass volumes of product -- when you give those partners better discounts and benefits than you do your non-value-add partners -- you're better. Differentiating between partners is more important now."
Barcodes' Motorola business is up more than 20 percent year over year, Nettesheim said, and that growth is spread evenly among Motorola Solutions' major business lines. The big year-on-year gainer, he said, is interest from customers in RFID, though mobility, scanning and wireless products are all growing.
One of the best things Motorola Solutions could do now, he said, is to drive more cross-sell opportunities for partners that have more than one Motorola specialty.
"Look at it as a solution provider," Nettesheim said. "Wireless combined with mobility, for example. I want to bring all of the pieces together with my clients."
Excalibur's growth specific to Motorola products has doubled in the past year, Jenkins said, and Motorola Solutions accounts for more than 60 percent of Excalbur's overall sales.
But Jenkins agreed that Motorola could stand to have its various product sets more tightly integrated.
"When they finally get all these products working on the same platform, I think you're probably going to see easily the strongest offering and by far the broadest offering in the marketplace," Jenkins said. "This is not a game that started yesterday and I think now we're starting to see the results of some of the planning they did. We're very high on this."