After Setbacks, Sun Steps Forth to Rebuild Its Luster

In the article, I lay out the reasons why partner satisfaction has dipped as a result of management upheaval, softening sales and difficulty in dealing with Sun. Moreover, I showcased some peculiar comments made by Sun CEO Scott McNealy himself in an accompanying interview presented word-for-word in a question and answer format. One comment, in particular, still rings in my mind and the minds of Sun partners who have read it and gotten back to me. The notion? That partners should be living off all the margins they supposedly stuffed somewhere in a mattress during the Internet boom years of 1998, 1999 and 2000.

What margins, one VAR said. Strange, e-mailed another.

Amid that backdrop, I sojourned to Amelia Island, Fla., this week to meet with Sun's top partner managers. The event: distribution giant Arrow's MOCA division's annual Net@work conference. As last year, I was an invited guest of MOCA president Rich Severa. My assignment: moderate an hour and a half discussion on the state of the Sun partner community. Afterwards, I arranged to meet with the very men from Sun whose program and policy shortcomings I mentioned in my Sept. 30 article. Short of Colin Powell's current job regarding Iraq, I'll match that with any assignment in diplomacy.

At this year's event,-MOCA's largest to date,-some 450 people representing more than 200 business partner companies attended scores of presentations and discussions given by a raft of industry professionals, many from Sun itself. Sun executive vice president Mark Canepa unveiled new, low-end storage solutions that could gut the market share of HP, for example.

The second-largest distributor of Sun products, MOCA is enjoying a bit of a resurgence, thanks in part to Severa's steady hand at the helm. In a private interview, he pointed out that his company has gained share, posted profits and increased sales in recent quarters. If all goes well in the fourth quarter, for example, MOCA will show a sales increase over last year in three consecutive quarters.

As a result of his company's recent success, Severa spent a great deal of attention on thanking his VAR customers for sticking with him through thick and thin. Ironically, at the very moment that he was on stage delivering a keynote address in which he showed his appreciation for them, Sun's other principal distributor, GE Access of Boulder, Colo., was preparing to tell its employees of steep staff cuts that were to come later that day. In all, GE Access laid off 78 people in North America, 13 percent of its workforce. Among the cuts were five vice president, including executive vice president Michael Minard, the organization's No. 2 decision maker.

Odd timing, to say the least.

While GE Access remains the largest distributor of Sun commercial products,-its share of the Sun distribution market is roughly 60 percent-,MOCA is a leaner organization. Severa, for example, doesn't have five vice presidents he could lay off even if he had to. One reason: he gambled in 2001 when his sales first slipped and made steep personnel cuts then and there. He only wanted to put the company through trauma once, Severa told me, and then get back to trying to build a business.

Build is something Sun, obviously, wants to do. After a rough summer during which the company lost executives of its own, including sales chief Masood Jabbar and, more importantly, COO and president Ed Zander, Sun is trying earnestly to convince partners that it has identified its shortcomings and worked overtime to develop plans to fix them. Knowing this heading into the event, I assembled a tough list of questions for Sun and its partners to mull over during my 90-minute session on Wednesday. Although MOCA works with a variety of companies,-at the event it unveiled a new alliance with Symantec,-I chose to zero in on Sun because the company accounts for the bulk of business that the overwhelming majority of the Net@work attendees do annually. (In the case of MOCA, it's still 80-plus percent, though down from where it was just a few years ago when 95 percent of the organization's business was Sun products distribution and financing.) During the interactive discussion, we addressed serious questions concerning technology, business and partnerships. Among the topics covered:

• What is Sun's most defensible intellectual property: Sun ONE, SPARC or Solaris?
• What is Sun doing to help with VAR profitability?
• Is a VAR better off trying to break into a new market with known solutions or selling new ones to old customers?
• Is there sufficient reward for remaining exclusive to Sun?
• Is Sun's channel large enough to make it the leading IT business technology supplier?
• Though normally outspoken, the VARs at the session started slowly due to their initial reluctance to openly discuss their feelings toward Sun. (Afterwards, one VAR approached and said, "What did you expect, Doyle, the stakes are high and no one wants to say something that will come back to haunt them.")
• That said, many partners did speak up about the state of the Sun economy, the treatment they received from it, both good and bad, and their desire for things to improve. They also spoke of their ongoing commitment to the company and its products.
• Although nervous heading into the event,-Sun knew most of the partners had read the article by the time they got down there,-Sun stepped forth with some good ideas, nonetheless. In fact, some of the ideas expected to be presented Thursday by Sun vice president of partner management and sales will go live as soon as the end of the month. A few were mentioned in the article. For example, Sun expects to soon have fully ready to go a new Sun ONE elite program that mirrors that rewards program that it built around its storage products. (Under terms of that program, participating Sun Storage Elite partners can receive rebates totaling 3 percent of all their Sun sales so long as at least 25 percent of that business is Sun storage related.) The Storage Elite program has been a huge success for the 41 companies who belong to the program, Sun says, so it's looking to expand it where it can.
• In addition, Grimes said he'll unveil new rewards for partners who maintain a level of "Sun-centricity" to their businesses. Think extra rebates for exclusitivity, he hinted. These and other programs have been greenlighted internally by Sun executive vice president Robert Youngjohns, who is head of worldwide sales. Since taking over that assignment, he has made it possible for Bill Cate, Sun's director of the iForce program office, to launch programs that he and colleagues inside Sun's five product groups have studied for months.
• When it came time to meet with Grimes, Cate and others, I found them surprisingly upbeat and open to address any questions I had on the Sun channel. No, they did not agree with some of the things I wrote. But they weren't the least bit defensive or standoffish in any way. I took that as a good sign.
• "We want to focus on three things for partners," Grimes said. "They are partner profitability, program simplification and partner recognition."
• Dressed casually in a creamy yellow Bobby Jones golf shirt, Grimes carefully laid out his plans for improving conditions in the channel. Above all, he insisted, Sun will return to its partner centric roots. The latter is something Severa, for one believes.
• "No leader in enterprise computing has ever done it alone and Sun understands that," he said.
• Spoken like a true Sun loyalist, you say? Perhaps. But Severa has demonstrated a willingness to speak with an open mind before and I truly think he's doing it this time when he praises the recent changes Sun has made of late.
• Time, of course, will tell if Sun's latest plans result in improved partner satisfaction. To be sure, the company has some work to do to reclaim the leadership it had. In last year's VARBusiness Annual Report Card study on partner satisfaction, Sun received the most praise out of nearly 70 different IT product manufacturers winning two out of the five categories it competed in. This year, it failed to win any awards.
• From what I heard in Florida this week, the company's channel managers are determined not to let that happen again.
• Promise to keep you posted.