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What is your strategy going forward for both the hardware partners and the software partners?
We see this sort of cross pollinazation happening really from all angles. Look at the Pythians (an Ottawa, Ontario headquartered Oracle partner) of the world which a few years back was just an SI. It has only been the last couple of years where they have actually been selling our products. They were strictly an Oracle systems integrator for many years. Then they moved into selling software along with services. And now they are selling the complete solution.
When we released the hardware knowledge zones immediately we had all of the existing Sun resellers go in and log on and become part of that community. But we had thousands of software VARs register for the hardware knowledge zones. I would say that the software VARs made the more aggressive moves saying we are going to carry the hardware too versus the hardware guys saying I am going to sell the software as well.
The reason that is the case is we really did do a lot of sales play, use cases, customer oriented tools and value propositions geared around why our hardware is best for our software. So the software VARs immediately went 'Okay, I can do this. These are my customers. I know what their workloads are. I know how to recommend hardware into these entities.' So they were the first ones to pick up the trend.
What percentage of the software VARs are carrying hardware?
I would say upwards of 35 percent of them and growing. Certainly with the Database Appliance the interest we have had with that product is just massive because frankly we have made it easy. We have made crossing that barrier a little easier.
Are the US numbers different?
How many of the 20,000 total partners are pure software?
A good number of them. Sun really only had 2,600 to 2,700 active hardware partners at the time of the acquisition. So 9,000 some odd pure software VARs.
Conversely you can sort of talk about the hardware base swimming upstream and I do categorize it that way. I don't mean it any sort of a demeaning fashion. Typically the skill sets of a hardware VAR that starting to sell things like competitive software value propositions and teaching a guy who sold servers and storage to now speak about why our Java cleanup and garbage collection is better in Weblogic versus WebSphere is a bit of a different conversation.
It takes a lot of training. We are starting to see that uptake now. But that side of it has been slower. Getting the hardware guys to cross over into software has been slower but the Database Appliance is making it easier. The key for us has been defining those tipping point use cases where it does make it easy.
Oracle President Mark Hurd has talked about adding 25 percent new direct sales people. How many people does Oracle have working in the channel right now?
The other half of Mark's sentence on adding 25 percent more sales folks is that they are all focused on those top 2,000 accounts and all of the incremental sales reps are focused in those top accounts across our vertically integrated apps. So a lot of additions to our GBU (Global Business Units like healthcare) products, a lot of additional focus being added to engineered systems sales specialists to go into our top accounts.
If you hear Mark break this down slowly the process he goes through is there is roughly $900 billion worth of TAM (Total Addressable Market) in our market today and $450 billion of that TAM exists is in these top 2,000 accounts. If you look at what our share is there today versus what everyone sells it is about five percent.
So if we were to double as a company and take that five percent share of wallet to ten percent share of wallet it is adding more people to sell more rooms of the house to large accounts. Because across these 380,000 customers that we have, we still have the opportunity, benefit and challenge to get them to use more and more of the stack. Very, very few of them use everything from app to disk. So that takes direct focus. So when we say we are adding direct sales guys it is to focus on those top accounts.
The rest of it is really driven by the channel. Now you ask a question about how many folks do we have dedicated to the channel. We have 2,500 people around the world that live, eat, breathe, and sleep partners. That is all they do. And there is additional folks whose primary selling responsibilities now is also selling through the channel particularly in Latin America and APAC (Asia Pacific and Japan) where upwards of 80 percent of our revenue goes through the channel in some of those territories.
Our inside sales folks do smiling and dialing but it is to generate demand for the channel. With Oracle Database Appliance we are doing some of that here right in North America. So we call the inside sales team Oracle Direct, which some times is confusing, but those guys do a very, high percentage of their business with the channel. They team up particularly with the Database Appliance they are teaming up with the VADs (Value Added Distributors).
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