Fair or Foul: SMB VAR Locks Horns With NetApp

A Network Appliance solution provider working with that vendor's StoreVault S500 entry-level storage array moved quickly to take advantage of a couple potential opportunities only to cry foul when he said he was thwarted by the vendor in pursuing those opportunities.

Ron Robinson, president and CEO of Innovative Technology Data Storage, an Atlanta-based storage solution provider, has been engaged with NetApp in a long-running battle over whether the vendor and its direct sales rep, who focuses his sales on NetApp's FAS line of midrange and enterprise storage appliances, is unfairly preventing competition from Robinson selling the vendor's entry level StoreVault line.

Robinson also accuses NetApp of violating its own dealer registration policy in the case of another customer who had been purchasing from a local solution provider but who was interested in making a deal with Robinson.

In the first deal, Innovative visited long-time NetApp FAS customer Cingular, as the wireless division of AT&T is still commonly referred to, and found interest in multiple units of the StoreVault for use as low-cost remote backup appliances, Robinson said.

While Cingular was planning to purchase FAS 270 arrays direct from NetApp, Innovative registered the deal as a StoreVault deal. "But then the NetApp rep heard that we were talking to Cingular, and didn't like it," Robinson said. "So Cingular called us to stop the deal."

The reason was simple, Robinson said. "The NetApp reps had no vested interest in selling the StoreVault," he said. "If they sell FAS or another solution, they don't want the customer to see other low-cost solutions."

Ed Smith, the local NetApp FAS sales rep, told NetApp's local StoreVault sales rep that Innovative can't go into Cingular with StoreVault, Robinson said. "The local NetApp sales rep doesn't like me because I sell the S500 against them even though its all NetApp product."

Actually, Innovative or any StoreVault solution provider is welcome to bring the S500 to the attention of any potential customer including Cingular and compete against NetApp's FAS line, said Sajai Krishnan, general manager of NetApp's StoreVault Business Unit.

The problem, said Krishnan, is that selling the StoreVault into an enterprise customer can be difficult.

"NetApp direct sales reps cannot sell StoreVault," Krishnan said. "If Cingular believes StoreVault is the right answer, Ron [Robinson] is the first choice. The customer can chose FAS or StoreVault. If the customer want's StoreVault, Ron will get the deal."

The StoreVault line, however, was not developed for enterprise accounts, said Leonard Iventosch, vice president of global channels for NetApp.

"It's for small and medium businesses," he said. "Sometimes an enterprise customer is interested in such a product. But StoreVault resellers should not be surprised if the customer is more interested in FAS. If you walk in and see Dell there, by all means compete with StoreVault. But if there's a Clariion [from EMC] there, FAS is the better solution."

NEXT: The customer will make the call

In the end, Iventosch said, the customer will make the final call. "They won't make their decision based on whether the NetApp rep is happy or not," he said. "This is a healthy situation for the customer."

Krishnan said that large deals have long sales cycles, but he and his team will support resellers for such deals, whether they are competing against any other vendor or against NetApp's FAS. "I get paid when we sell StoreVault," he said. "But Ed's reaction is to be expected. He doesn't get comped for StoreVault sales. And if he didn't see the potential deal at Cingular, he wouldn't have been doing his job."

It is Ed's right to sell against a StoreVault solution provider, as long as he doesn't trash-talk the products, Iventosch said. "If the customer is happy with lower-end products, we're happy to do the deal," he said. "But if the NetApp rep can come in and upgrade the deal to FAS, we will do it."

There are often gray areas where the deal could go FAS or it could go StoreVault, Iventosch said. In such cases, for every potential FAS deal which then becomes a StoreVault deal, there are about 10 potential StoreVault deals which become FAS deals, he said.

"In most of these cases, while the customer says it wants the functionality of our ONTAP operating system and cheap disk, when the sales rep talks about mirroring and snapshots and scalability, the customer sees the advantage of increasing its budget for FAS," he said.

Solution providers will see multiple competitions in a deal, and the Cingular deal is still in the early stages, Krishnan said. "Ron has been with us only four months, and is learning how to work with us. We have a 100-percent reseller model."

Robinson said he disagrees with Iventosch's contention that enterprises are not very interested in the StoreVault.

"Most large businesses with branch offices are looking for small storage devices to replace tape," he said. "I'm talking to several enterprise customers who are looking at multiple StoreVaults."

Robinson said he wonders sometimes if NetApp is aware of what is happening in the field. "I talk to a lot of customers interested in StoreVault," he said. "StoreVault sales will start pressing against NetApp's other sales. They should have thought about that before."

In the other case, Innovative was contacted by a government customer on the other side of the country about StoreVault.

That customer, NASA's Jet Propulsion Lab in Pasadena, Calif., contacted Innovative to request a bid on the StoreVault as part of a government requirement that such deals get at least three bids.

Robinson said he registered the deal, and received confirmation from NetApp, and that as of Tuesday of last week was awarded the contract. However, instead of getting the purchase order as expected, he got a call and e-mail from JPL telling him to disregard the earlier message because the organization was still receiving RFQs (request for quote).

"Something changed," he said. "I went to NetApp and said I had the deal registered. NetApp said that JPL already has an incumbent reseller. That reseller said he owned the JPL account."

That explanation angered Robinson. "I said, you have to register a deal, not a customer," he said. "If the deal is registered, and then it isn't, how can anybody hope to pursue deals with customers?"

Eventually, Innovative got the deal, but Robinson said he had to drop the price another couple hundred dollars below what he could have charged based on the registered deal price.

Krishnan said that JPL had bought several units in the past from a southern California solution provider, but that in this one case Robinson heard about the deal and registered it. "Ron should not have gotten the deal," he said.

NetApp tries to verify all deal registrations, but averages about one dual-registration a month, Krishnan said. "In this situation, JPL is a large company," he said. "We are not sure about what department this deal came from. The southern California VAR registered the deal from JPL, but didn't mention the department."

For a company the size of JPL, the granularity should be at the buying center level or department level, Krishnan said. "These sorts of things happen, he said. "We try to make these processes as watertight as possible."

NEXT: NetApp responds

In any case, Krishnan said, Robinson did not sell the StoreVault at a loss. "He's too smart a businessman to lose money on the deal," he said.

In this case, it is the long-term JPL solution provider, not Robinson, that is the "aggrieved" partner, Krishnan said, and as such will get some type of compensation.

Robinson said that Innovative was not fishing for any deals with JPL. " JPL called us, we didn't call them," he said. "No one can deny the fact that JPL called me."

As for Krishnan's excuse that NetApp didn't know what department at JPL was looking to make the StoreVault deal, Robinson said he presented all the relevant information to NetApp when registering the deal.

"Every opportunity is an RFP (request for proposal) number," he said. "And this partner opportunity had an RFP number. If you call the buyer, he will tell you the buyer called us. Part of the deal registration process is to submit detailed information, which we did: the buyer's name, department, phone number, etc. All that information is part of submitting for deal registration on-line.

"When NetApp says that, why don't they pick up the phone and call the buyer that called me? Nobody did. They can pick up the phone as easily as I did."

A NetApp solution provider that sells both the FAS and the StoreVault lines said he has mixed feelings about the arguments between NetApp and Innovative's Robinson.

In the Cingular case, the solution provider said that Robinson seems to be reaching up into a higher level of customer without the depth of experience he needs. "But I gotta give him credit," he said. "He has the cojones to really go for it."

Robinson said it is more than cojones. "I know all the Cingular team from when I worked with IBM and Hitachi," he said.

In the JPL case, NetApp's handling of the deal could result in almost everyone losing, the other solution provider said.

"The customer loses because it might not get the local service it needs for the unit it bought from Robinson," he said. "The southern California VAR loses because someone else came in with a deal. And NetApp loses because others will question how will its deal registration works."

But in the end, the solution provider said, Robinson is in the right. "The government needs multiple bids, and the southern California VAR wasn't able to secure the deal," he said. "And NetApp doesn't' seem fair by compensating that VAR for not getting the deal."

Despite the back-and-forth between Robinson and NetApp, expectations are likely the two will continue to work with each other going forward.

Robinson said he is still working StoreVault deals with enterprise customers, and is exploring getting FAS-authorized, a move that should not run into any issues as his company is already certified with competing products including EMC's entire Clariion CX line of arrays.

Krishnan said that Robinson has already gotten into multiple opportunities in the four months or so he has been working with NetApp. "Ron is a valued StoreVault reseller," he said. "I'm happy to work with him. Ron has a great future with NetApp. And Ron knows how to contact me."

Robinson and Innovative are in many ways actually the kind of solution providers vendors like NetApp looks for, Krishnan said. "The exciting news is that Ron is hunting," he said. "I'd rather work with someone like him than someone asleep at the wheel."