Palmisano's Partner Pledge

Did you hear the story about a handful of IBM's top partners that were recently summoned to the company's headquarters to meet with chairman Sam Palmisano and walked away with $100 million in their pockets?

Well, the story, which has been floating around the channel for the past few weeks, is true, according to some of those in attendance. The IBM boss did have a private meeting with about 10 of the company's top VARs to discuss how IBM could gain at least a point of market share in the channel and what obstacles stood in the way of solution providers growing more quickly.

After each VAR talked about the issues facing their organizations, Palmisano allegedly put $100 million on the table. That's right. With a touch of drama--he's said to have tossed a coaster on the table like a stack of poker chips--Palmisano told the partners that, if they were willing to fund new projects around IBM's products, he would match their investments--a bold move for IBM, but keep in mind, it still has $11 billion cash on hand.

Palmisano must be feeling pretty good these days. News of favorable third-quarter results lifted IBM's stock out of the doldrums and helped buoy the entire technology sector. But was it good news for IBM's channel? That's a question many of IBM's partners should be asking Ravindra Marwaha, the incoming head of IBM's worldwide partner program.

IBM touted gains for its zSeries line of mainframe computers, but let's be frank: The mainstream channel doesn't benefit much from that product line. And iSeries sales plunged 22 percent. At the same time, Big Blue's global-services business climbed 3 percent, and the semiconductor side of the house demonstrated robust growth. But neither sector benefits VARs directly. So IBM has got to figure out how to provide its hardware partners with growth vehicles and do a better job of addressing the volume space.

On the flip side of the coin--software--IBM's good fortune does bode well for the channel, but the vendor needs to find new VARs to keep up its momentum. The WebSphere product line posted the biggest revenue increase, followed by the information-management products. Both lines hold the most promise for solution providers and have the broadest channel at IBM. Yet software- and service-oriented partners are certainly looking at the Tivoli portfolio, whose revenue grew nearly 44 percent, and wondering why IBM isn't doing more to give them access to those product lines.

No doubt, there's more urgency these days at IBM to expand its volume channel and address VARs that serve the midmarket. This is perhaps the single-most important channel initiative that IBM has ever taken on, and pulling together a cohesive channel strategy around the midmarket could be Marwaha's legacy.

Can Acer Be More Than a Price Play?
Ask vendors what's been their biggest headache over the past two years and they'll all give you the same one-word answer: Acer.

The Taiwan-based computer company has been a thorn in the side of Toshiba, Hewlett-Packard and Lenovo with its sell-'em-at-the-lowest-possible-price notebook strategy, and the vendor has made life uncomfortable for display-makers as well. Many of Acer's competitors claim that the company is using the U.S. market as a loss-leader and making up for it in Europe and other international markets. However, it's hard to prove that claim by looking at Acer's financials.

But can the vendor make the switch from low-priced alternative to genuine market leader, especially here in the United States? Acer has built itself into the fourth-largest PC vendor, but what about its value proposition? And the channel? The company hasn't made a serious attempt to 'sell' its products to solution providers and differentiate itself from, say, Lenovo, which is rebuilding both its brand and its presence.

So, what's Acer going to do next? The vendor's executives should study how distributor Synnex repositioned itself after years of fighting Ingram Micro and Tech Data on the price front. Acer expects to generate some $12.4 billion in sales this year, and long gone is the channel focus of founder Stan Shih. Chairman J.T. Wang and President Gianfranco Lanci are wasting valuable time. Neither did much to capitalize on Acer's 30th anniversary--a milestone for any IT player.

Robert C. DeMarzo is vice president/publisher of VARBusiness and GovernmentVAR magazines.