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Digium isn't the only Linux player launching a new channel program. With the launch of its MySQL Enterprise Connection Alliance channel program, MySQL is aiming to increase the number of partners in its stable from 20 to 200 this year. The open-source database maker's aim is to triple channel sales from 10 percent of revenue to 30 percent.
Paul Weinstein, executive vice president of business development at MySQL, said the Cupertino, Calif., company has moved to a channel-neutral compensation model to help drive partner business. "That is a massive change," said Weinstein, who helped drive the channel model at Check Point Software Technologies before taking the MySQL job. "This is a radical disruption in the marketplace. The database tax is traditionally 20 [percent] to 40 percent of an application. We believe that is ridiculous. Open source is a tidal wave. If you don't get on the bandwagon, your customers are going to go somewhere else. Why pay $100,000 for something when you can get it for $10,000?"
The dramatic differences in the price of competing enterprise CRM solutions also is driving growth at SugarCRM, which just launched a three-tier channel program with beefed-up training for partners. SugarCRM said it aims to quadruple its number of partners. Part of that includes adding formal certification and training to its top-tier Gold partner program, said Jeff Campbell, director of channel sales at SugarCRM, Cupertino.
SugarCRM also is mounting an aggressive partner search for VARs interested in private-labeling or reselling its hosted on-demand solution to go against the likes of Salesforce.com. "The channel phone is ringing off the hook," Campbell said of partner interest in the open-source CRM vendor's wares. "You won't find a CRM solution out there at this price point. Open source gives our partners the ability to deliver more and better services within the budget that the customer has set for the overall project."
In competitive CRM implementations, software licensing eats up the majority of the client's IT budget, hampering the ability to deliver a completely customized solution, Campbell said.
That is also true in the bread-and-butter small- and midsize-business segment. SwitchVox, for example, expects to increase its channel budget several times this year as it moves to boost its active reseller ranks by 25 percent to 250 partners this year.
Gregory Boehnlein, vice president at N2Net, a Cleveland-based provider of mission-critical hosting for voice and data services that is a SwitchVox and a longtime Linux proponent, said he is regularly coming in at half the price of a Cisco or Avaya PBX solution and still making 40 percent margin. The channel programs from SwitchVox, San Diego, and other open-source players such as unified threat security vendor Astaro, Burlington, Mass., have helped significantly increase his profitability on each and every Linux solution sale, he said. "These programs are not only bringing the cost down to the end user, but making the profit margin for us higher," he said. "We're able to deliver a more cost-effective solution to the customer and make more money at it."
Boehnlein said his sweet spot is small businesses that range from 10 to 200 seats and are put off by Cisco and Avaya "sticker shock." Another big reseller advantage with SwitchVox, Boehnlein said, is he isn't dragged down by heavy sales requirements to maintain reseller certification. Boehnlein is so pumped up about the Linux open-source VoIP opportunity that he and a number of partners formed a new company last year, EToneConnect, which is aimed at delivering VoIP services across private networks by recruiting VAR partners. "This is going to far outshadow N2Net this year," he said. In fact, he predicts that EToneConnect will hit sales of $12.5 million this year. "We are building EToneConnect as a distributor of these products to a whole gaggle of smaller guys like me whose current service providers are not giving them the margins they need to survive," he said.
Astaro, meanwhile, is increasing its total channel spend by 50 percent this year as it moves to double its sales this year, said Astaro Vice President of Sales Alex Quinonez. That means also doubling the number of Astaro partners in the United States to 900 this year, he said.
The Linux channel revolution means businesses of all sizes are no longer tied to corporate giants for robust enterprise-class solutions, Quinonez said. Those old-school vendors are offering solutions that are at least double the cost of an Astaro unified threat management solution, he said.
"The beauty of our solution is there is so much room for margin and growth," he said. "Your typical VAR sells a Cisco solution at 4 percent margin. That's a commodity. They can sell our solution at 30 percent margin and build a security practice focused on small to medium-sized enterprises."