Is SonicWall Pulling Away From Its SMB Core?


SonicWall channel partners say they're confident that the company will remain true to its channel following last week's news of the impending acquisition by investment firm Thoma Bravo, but say that there are signs that the company is pulling farther away from its SMB core as it makes further inroads into the enterprise.

SonicWall announced last Wednesday that it had agreed to be acquired in a deal led by investment firm Thoma Bravo in a deal valued at $717 million. Under the terms of the agreement, current SonicWall shareholders will receive $11.50 in cash for each share of common stock they held, representing a 28 percent premium over the company's most recent closing price. However, the merger's finalization is still contingent upon approval by SonicWall's shareholders as well as other regulatory approvals.

However, SonicWall partners say that, even before the aquisition was announced last week, the company appeared to make strategic decisions indicating that it was slowly pulling away from its smaller SMB and boutique partners while placing more resources and focus on enterprise markets.

Jeff Roback, owner of boutique VAR Praxis Computing, based in Marina Del Rey, Calif., said that over the last several months, SonicWall had suddenly raised Praxis' distribution prices by 10 points, which a rep later said was imposed for not adhering to a $20,000 per quarter quota. Roback said that no notification preceded the price hike and no one responded to his e-mail queries questioning the policy change.

"That to me kind of says who SonicWall is at this point. They don’t need to be responsive to smaller partners," he said. "It's not to say they're right or wrong. Boutique partners might take up too much of their time. I think they feel the product is so successful that they don't need evangelists."

Roback said that he still was happy with the quality of SonicWall's products. But the unexpected price change coupled with the lack of responsiveness was enough to make him consider other security vendors, he said.

"I don't see how making small VARs uncompetitive in the marketplace helps them. What they may be thinking is that midsized VARs can sell in the SMB," he said. "It's strange because it's not the company that we've been dealing with. It's kind of a sharp change."

The recent enterprise shift isn't entirely unexpected. During its February 2008 partner conference, SonicWall announced that it was planning to make significant inroads into enterprise markets.

At the time, SonicWall CEO Matt Medeiros said that the move was an expansion, but that the company still planned on continuing to focus on its core SMB markets.

Meanwhile, SonicWall executives contend that the company plans to remain true to its SMB partner base.

“The core of our business has been SMB. We built a $200 million dollar company on SMB and an award-winning channel program on SMB. We are expanding into the enterprise. More and more customers are using SonicWALL products and a lot of those customers are enterprise. We are enhancing our offering, but in no way will it be at the expense of our SMB customers.” said Marvin Blough, SonicWall vice president of worldwide sales, in an e-mail to CRN.

“Our VAR Advisory Council, in a call last week reviewing the Thoma Bravo announcement, did not share that perspective," said Steve Franzese, SonicWall vice president of worldwide marketing, in an e-mail to CRN. "We are all about 'business as usual which, in our case, has both an SMB and an enterprise component.”

 

Next: Partners Express Concerns About Enterprise Expansion