Keeping Customers Happy

VARBusiness: What do you look for in a partner?
Bloom: Skills. specifically the engineering and technology knowledge to successfully implement customer solutions. When you look out in a market [like this one] for partners, you have to ask how partners help with their skill level or their technology, whatever the case may be, to simplify installation and bring a faster return on investment back to the customer.

VB: You've had a strange and difficult period with regard to your stock price. How do your partners react to these fluctuations?
Bloom: When you talk broadly, our stock has been under pressure because of the reduction in forward guidance, just as many other companies have had. The difference is that ours went from a beginning-of-the-year plan of 45 to 50 percent growth to a plan at this stage for 25 to 35 percent growth. But it's still a substantial growth in the market place. [What] rocked the boat more than anything in the last earnings announcement was that we used the comment that we're going to stay fully invested. That means we're going to continue to invest in people and the resources necessary to move the Veritas economy along. We're going to build more products, continue with our marketing strategies, continue to add people, and continue to recruit and service partners. We're going to increase our capacity in the marketplace to be more successful and to ensure our growth.

VB: In May, your mix of direct vs. channel sales was 50-50. Has that changed?
Bloom: I don't think our mix has fundamentally changed. I think it's been pretty stable, and it will be stable as long as we continue to enter new marketplaces. When we enter new marketplaces, we rely on distributors and partners to introduce us and to get us more active in the new market.

VB: Is channel conflict as big an issue in the storage-software space as it is for hardware vendors?
Bloom: Hardware vendors have a harder time with channel conflict because they're always fighting commoditization. We're taking an approach where partners are critical to our strategy. I think Veritas, unlike many companies, has done an incredibly good job of reducing or eliminating channel conflict. My best gauge of that is, how often do I get phone calls or e-mails from partners who believe that they have a conflict with their channel with Veritas? The answer is almost never.

VB: How would you describe your direct-sales business?
Bloom: If you segment the market, we're selling more directly in Fortune 500 accounts in the very high end of the market because enterprise clients are asking us to have a more direct relationship with them. But once you leave that marketplace, we're very dependent on our channel partners for the broader, small-to-midsize business market up to enterprises that fall below the Fortune 500.