Look who's scoring a knockout with a one-two punch of innovation and improved customer ROI
Some of the biggest and baddest technology vendors have made a fine art of using FUD—fear, uncertainty and doubt—to bully any and all comers to adopt their product or solution sets. And for years risk-averse customers with hefty IT budgets would fall sway to that perennial line: "No one ever got fired for buying (fill in your vendor of choice)."
Fast forward to 2008. IT budgets are tight. Customers of all stripes are looking for improved ROI and are more willing to place a bet on innovative technology that delivers more bang for the buck. The FUD factor doesn't play like it used to. In fact, alternative vendors are being embraced at a record-setting clip. They are growing faster than the big vendors, and there are more of them than at any time in the history of the technology business.
This year's CMP Channel Alternatives Study features 144 alternative companies compared with 96 last year. What's more, the study found that 63 percent of the time customers have no brand preference. That's a big opening for solution providers carrying these vendors. Call it the "attack of the alternatives." Only it's no science-fiction fantasy. It's real.
Just ask Matt Medeiros, president and CEO of SonicWall Inc., and Jack Domme, COO of Hitachi Data Systems. Both have competed for years against two of the biggest, baddest wolves (Medeiros against Cisco Systems Inc.; Domme against EMC Corp.). And both have led their companies to big sales and profit gains by providing more value for customers and more margin for their partners.
With the economy in free fall, Medeiros and Domme say it's easier than ever to compete against industry giants.
"As we see the economy getting pushed closer and closer to a recession, alternatives are being talked about far more frequently," said Medeiros.
Domme sees Hitachi gaining traction in accounts where it was previously tough to get in the door. "Budgets are flat or tight so customers are looking for a solution that saves them money," he said. "A lot of customers are sweeping the floor, [moving] from EMC to Hitachi."
Ron Dupler, president and CEO of GreenPages Technology Solutions, a $120 million Kittery, Maine, solution provider whose Hitachi business is up 100 percent in the past year, said alternatives like Hitachi are winning the day in midmarket accounts trying to find "the best technology solution for their dollar." Dupler said one of the benefits is the higher margins and tighter relationship with the vendor. "Second-tier vendors are more hungry and have richer programs," he said.
Next: The SonicWall Advantage
The SonicWall Advantage
VARs say they are winning with SonicWall because its solution has been built from the ground up to address the cost-conscious SMB segment.
Eryck Bredy, founder and CTO of BNMC, an Andover, Mass.-based IT services company that partners with both SonicWall and Cisco, said a comparable Cisco solution for a 250-person shop is three times more expensive than the SonicWall offering. He says Cisco needs two separate ASA appliances (the Cisco ASA 5520 IPS Edition and the Cisco ASA 5520 Anti-X Edition at a combined cost of $23,690 vs. the SonicWall Pro 3060 with Enhanced OS with a comprehensive gateway security suite at a combined cost of $6,290). "What Cisco has done with its PIX firewall and the ASA line is try to take an enterprise solution and architect it for small business," Bredy said.
In fairness to Cisco, Bredy said that the twin box offering will outperform the SonicWall solution. "Cisco makes the best-performing box out there," he said. "But where Cisco loses out is that the small-business owner is not solely concerned with performance. He is concerned with cost."
Medeiros points to a nearly $1 million, multiyear deal with a semiconductor company that pitted SonicWall and one of its partners against a Cisco offering in a Cisco-dominated IT network environment.The SonicWall solution not only came in at a substantially lower price, but also was "easier to use and manage across the large-scale network," he said. "They truly looked at total cost of ownership and we won hands down," said Medeiros. "Given the current economic trends in North America with budgets being tightened, the CIO felt that he absolutely had to consider an alternative and that is how we got brought to the party. It was an absolute Cisco environment."
When the CIO signed the purchase order, he left Medeiros with a telling final comment: "He said: 'No one ever got fired for buying Cisco,' " said Medeiros. " 'But everyone's been fired for blowing their budget.' "
Dave Cerniglia, president of Consiliant Technologies, an Irvine, Calif., Hitachi partner, competes against EMC in virtually every deal. He said Hitachi has a more cohesive product line with a common foundation than EMC's bric-a-brac point product set. "Hitachi has a clear competitive technology advantage," he said. "People don't want point products. They want a platform solution that makes it easier to move forward as technologies continue to evolve."
Cerniglia said he decided to base his business exclusively on Hitachi six years ago and he's never looked back, adding that his Hitachi business was up 35 percent last year. "I couldn't afford to partner with someone that didn't provide me with 100 percent reliability and availability," he said. "I don't have to deal with customer service issues with Hitachi."
Domme said the reason Hitachi partners are seeing that kind of sales growth is the higher ROI with Hitachi storage solutions. One example: Hitachi's impressive storage virtualization technology, which is pumping up storage utilization rates from a mere 20 percent to as high as 80 percent. "We just haven't seen EMC [storage] virtualization come out," Domme added."Our partners really appreciate the R&D and vision they get with Hitachi."
Domme points to a multimillion-dollar win Hitachi scored with one of its partners six months ago against EMC for a large financial institution. "We went head to head against EMC Centera and won the deal," he said. "Customers are seeing the value we are delivering with a combination of hardware, software and services, and margins are fairly healthy for us and our partners. Customers are willing to pay for that value."