Few And Foolish

In our cover story this week, CRN Industry Editor Craig Zarley and Distribution Editor Scott Campbell take a critical look at the channel and distribution policies of those vendors gambling that stronger relationships with fewer solution providers will boost market share. There are clearly big differences in Microsoft's approach to partnering and the strategy being pursued by companies such as Sun, Oracle and EMC. Microsoft, which has one of the largest stables of partners, has outperformed by a wide margin the likes of Sun, Oracle and EMC. And one reason is the company's broad partner reach across every segment of the market, from small to medium to enterprise accounts. Too often, Sun, Oracle, EMC and others are more interested in maintaining tight account control with artificial restraints than with empowering partners.

The biggest benefit of the broad approach taken by Microsoft is in the payoff in both the top and bottom lines. Microsoft, which has 50,000 partners in North America, in its most recent fiscal year ended June 30 posted net income of $7.83 billion on a 12 percent increase in sales to $28.37 billion vs. $25.30 billion in the prior fiscal year. Sun, which has several hundred partners, in its fiscal year ended June 30 posted a loss of $255 million on a whopping 32 percent drop in sales to $12.5 billion vs. $18.25 billion in the prior fiscal year. Oracle, which has thousands of partners but only 300 to 500 making deals in a given quarter, in its most recent fiscal year ended May 31 posted net income of $2.2 billion on a 12 percent drop in sales to $9.67 billion vs. $10.96 billion in the prior fiscal year. Finally, EMC, which has several hundred partners, for the six months ended June 30 posted a loss of $76.1 million on a 39 percent decline in sales to $2.68 billion vs. $4.36 billion in the year-ago period.

The numbers speak for themselves. My message to vendors is the few and foolish are going to lose every time to the many with muscle.

Which vendors have 'few and foolish' programs? Let me know at (781) 839-1221 or via e-mail at [email protected].