XChanging For The Better

At XChange, which is produced by CRN publisher CMP Media, IBM will announce it is cutting the entitled discounts on its new P5 and P4 pSeries servers. The Armonk, N.Y., vendor is also extending special bid-pricing certification to the products. Both are moves that could increase IBM Business Partners' margins on the products by more than 10 points, they said.

"IBM wants us to get off of one another with this channel stacking that they've had," said Mike Gray, senior vice president of sales at Champion Solutions, an IBM Business Partner in Boca Raton, Fla., referring to situations in which more than one IBM Business Partner bids on the same deal. "In the end all we do is beat each other up and it just comes down to price. The partner that's done the work and [has] been there for years is battling with three other partners and can't make any money on the deal."

To address this issue, IBM late last month lowered the discount on its pSeries P5 and P4 and included those new systems in its special bid-pricing certification system, said John Guido, vice president, channel management and strategy, IBM Americas Business Partners. "This allows [Business Partners] to hold onto the promotion incentive instead of bleeding it to the street," he said.

Business Partners said IBM previously gave all Business Partners certified to sell pSeries a discount of 20 to 25 points on systems. Now that discount has been lowered to about 8 percent, they said.

Additionally, the bid certification qualifies for special pricing only the solution provider who develops the opportunity.

Gray said the net effect of lower discounts to all partners and special bid pricing for only one partner in an opportunity should increase his pSeries margins on average by about 10 points.

"This will help partners sell the Power 5 advantage instead of competing on price," Guido said. "[Since] partners will avoid the level of stacking because they know they are protected, we think partners will start reaching out to more of the white space, reactivating current customers and going after the competition."

Joe Wurtz, vice president of open systems at MSI, an IBM Business Partner in Omaha, Neb., noted, "There is going to be a large demand of high-end skills [with the P5 introduction], and by adding margin into the channel, [IBM] is going to enable partners to further invest in their [services] skills to keep Power 5 strong," he said.

Gateway, another XChange attendee, is adding a level to its ProNet channel program aimed specifically at small solution providers that have found it difficult to work with the vendor in the past, said Tiffani Bova, senior director of small- and midsize-business channel sales and marketing at Gateway, Poway, Calif.

The new associate level of the ProNet program allows smaller partners that normally lack access to Gateway's outside- or inside-sales reps to order products for customers online, Bova said.

Prior to this week, ProNet had two levels of solution providers: premier partners that commit to quarterly Gateway sales of $250,000 and in return get access to dedicated inside- and outside-Gateway sales reps, and member partners that get access to inside-sales reps in exchange for a $50,000 quarterly commitment.

At XChange, Macromedia plans to unveil a new partner program for its Breeze Web conferencing, e-learning and training product. The program is open to three kinds of partners: VARs, called authorized Breeze partners; service providers that build solutions and influence sales of Breeze, called Breeze influence partners; and strategic resellers, which strictly resell Breeze for margins.

Mike Bergeron, senior vice president of channels and business development for Macromedia, San Francisco, said the company already has 10 partners in the new program, and aims to add 15 to 20 more by the end of September.

Macromedia also set up a deal registration for the new program that pays a partner a finder's fee should that partner register a deal but another partner close the deal. The program "gives partners protection that they get compensated for their efforts even though they may not close the deal," Bergeron said.

JOSEPH F. KOVAR and ELIZABETH MONTALBANO contributed to this story.