Pricing Project Orion

With only two months to go before Orion is scheduled to be launched, sources say Sun executives are stuck on how to price the product in the market,and how to set a fair compensation model so Sun's VAR and solution provider partners can make a significant profit.

A Sun spokeswoman said Orion pricing has not been finalized and declined further comment.

Solution providers said a key issue is whether partners will receive up-front discounts on Orion and then mark up the price to their customers, or whether they'll buy the products from Sun at the market price and then receive back-end rebates depending on their status with Sun.

Elite partners, such as Brighton, Mich.-based solution provider Dewpoint, would benefit more from back-end rebates,a plan that seemed amenable to both Sun and its partners a month ago, sources said.

Yet Dewpoint President Rob Mock said that approach is under pressure from Sun executives who fear that partners that have less investment in Sun,and therefore would consequently receive a lower rebate percentage than Elite partners,might cry foul.

Eliminating the back-end rebate model option, however, could alienate partners who have invested significantly in Sun, Mock said.

"If [Sun executives] cave to up-front margin pressure, it will be a complete devaluation of the investment we've made as an Elite software partner," Mock said.

The pricing debate muddies Sun's planned debut for Orion, which will bundle a slew of Sun ONE Java software with the Solaris operating system. Sun is hoping that leveraging its crown jewel Solaris in this way will boost the lukewarm sales of other software assets.

Sun intends to debut a beta of Project Orion later this month, with a formal introduction of the product bundle scheduled for the Sun Network show in September in San Francisco.

Products slated for inclusion in the September launch are Sun Cluster Server; Message Queue Enterprise Edition; Instant Messaging; Calendar Server; Messaging Server; Portal Server; Portal Remote Access Server; Identity Server; Web Server, two versions of the Sun ONE Application Server, Standard Edition and Platform Edition; and Directory Server.

Jim Guinn, national practice director at Consultants' Choice, a solution provider in Houston, said it is essential for partners to get behind Orion. Beset by workforce reductions and downsizing in the past two years, Sun doesn't have the resources to make the bundle successful without a significant commitment from its channel, he said.

"Sun wants to work out pricing strategies where we'll be able to price [Orion] so we don't have to look for another platform partner," Guinn said.

Along with its plans for Orion, there are other signs that Sun is taking steps to improve its software fortune.

Sources recently told CRN that Sun is mulling whether to mandate software quotas of up to 20 percent on all of its salespeople as part of a restructuring that is in effect as Sun began its new fiscal year on July 1.

PAULA ROONEY contributed to this story.