Dot Hill Puts Business In Hands Of Channel

"We found [direct sales] was an impossibly expensive business model to maintain," said Omar Barraza, Dot Hill's director of product management.

"About two years ago, we sat down and revisited our business plan and said, 'How can we help our users the most and give them practical, affordable storage solutions?' " Barraza said. "We found we needed to go back to the channel and we needed to commit 100 percent to it. Most of our [competitors] had a foot on each side of the fence [between direct and channel sales]. We said, 'We're too small to do that.' "

The company is enhancing its program for solution providers, value-added resellers and systems integrators. In doing so, Dot Hill executives said they estimate that 90 percent of the company's sales will go through the channel in 2003, up from 63 percent in 2002.

Dot Hill's financial performance has been mixed. While the company's revenue increased to $16.3 million in the fourth quarter of 2002 from $8.6 million in the third quarter, the vendor reported a loss of 49 cents per share. But Dot Hill executives told investors the company was poised to return to profitability in 2003 amid what they predicted could be a tripling of revenue.

While that's an aggressive estimate, many storage solution providers are expecting sales growth this year. According to the most recent CRN monthly solution provider survey, 38 percent of those questioned said they expect growth of at least 6 percent in the near term.

Dot Hill seems ready to capitalize on that, as it ended 2002 with an order backlog of more than $26 million, according to company reports.

The company has about 50 channel partners, Barraza said, but that number could double this year.

"We have a great relationship with [Dot Hill's] local sales [representative] and the channel sales manager," said Donna Richter, senior account executive of Sunstar Co., Inglewood, Calif., a storage solution provider and Dot Hill partner.

Richter said Dot Hill approached Sunstar prior to the new channel push in February and told the solution provider it would begin offering more details on products, programs and leads to help increase sales.

"The communication with Dot Hill really started to pick up," Richter said. "There has definitely been a pickup in communication, a pickup in interest, a pickup in [customer] phone calls."

Richter said Sunstar would shortly determine how much this activity has impacted revenue, as it approaches the end of its 90-day sales cycle.

In addition to offering Dot Hill-branded storage systems,including its SANnet II Fibre Channel, SANnet II SCSI and SANnet II Blade products,Dot Hill is an OEM for privately branded Sun Microsystems RAID storage products, Barraza said. The Dot Hill-branded systems are tailored more for lower-end, midsize businesses that need redundant, highly available but cost-effective storage systems.

"[Those businesses] want to move to SAN technology, but they can't do it in 5 and 10 terabytes," Barraza said.

Richter also said the product set was a good one for midsize customers that Sunstar maintains, and that Dot Hill's commitment to the channel should be an advantage to its partners and itself in a growing segment.

"Whereas some partners go back and forth [between direct and channel sales] and need to make amends every time they start working with the channel, Dot Hill doesn't need to do that," Richter said. "They just needed to start engaging [solution providers] more, which they are doing."