EMC is trying to move the majority of its channel partners to distribution to focus its resources on a more limited number of partners.
The storage vendor expects 175 to 200 of its current 250 North American solution providers to sign up with either Avnet or Arrow North American Computer Products, said Gregg Ambulos, vice president of global channels at EMC.
The move to emphasize distribution is a follow-up to plans EMC unveiled last year to cut the number of channel partners with which it works direct, said Ambulos.
The company's channel strategy is evolving, and distribution plays a key role in helping partners sell EMC's value proposition, Ambulos said. "We feel that the relationships we have with our distribution partners Avnet and Arrow will enable us to address that market space we're going after," he said.
The traditional EMC play has been one of capacity, but the company is now using software and services to help drive hardware sales in both EMC and non-EMC environments, said Ambulos. "We're going to be spending a lot of time with both Avnet and Arrow to make sure that they clearly understand this message and are able to articulate that to their partners," he said. "[Our primary focus is to get our partners to the point where they can be self-sufficient and go out there and drive EMC hardware, software and service solutions."
Smaller EMC solution providers said they like the move, noting that the vendor has over the past couple of years turned into a channel-friendly partner and is offering benefits to working with distributors.
Greg Hagerl, director of sales at Lewan and Associates, Denver, which just closed a $1 million deal for EMC's Symmetrix line with the help of the vendor's local sales reps, said he does not see any issues in deciding whether or not to sign up with a distributor. "We're going to make money, the distributor will make money," he said.
There are definite benefits to working with distributors, said Pat Edwards, sales manager at Alliance Technology Group, a Hanover, Md.-based solution provider that has sourced its EMC products from Avnet since it signed on with the vendor for the second time about six months ago.
EMC separates its channel partners into three levels, and distributors are at the Gold level, said Edwards. If an EMC rep brings in a Gold partner, or a solution provider that partners with a Gold partner, he gets paid immediately for the deal. "The reps like working with us because we work with a Gold partner like Avnet," he said. "We're riding Avnet's coattails."
EMC's small and midsize enterprise sales reps have to make deals via partners and can't go direct, so they are assigned a partner, Edwards said. "Our rep comes in here once a week to look for a way to help us make sales," he said.
Dave Ochser, vice president of strategic business development for storage products at Avnet, said Avnet can bring solution providers benefits not available from EMC. "Our job is to build programs to help VARs grow EMC business," said Ochser. "We are preparing financial programs, some strong marketing programs, some great educational and training road shows solely around EMC and storage.
"EMC really has made an about-face in its commitment to the channel," Ochser added. "The first thing they've done is beef up their channel organization. . . . Any end-user opportunity $500 million or less must get through an indirect channel. There are a couple of caveats, but nothing to throw up a red flag. The important thing is EMC is saying there are clear, defined boundaries, and they want to make sure everybody knows how to sell in the channel. That's a huge statement for EMC. We've been working with them over a year and it's the most clean and concise it's ever been."
Arrow executives were not available for comment.
An EMC spokesperson said EMC is "encouraging," not forcing, its solution providers to sign up with distribution. Direct VARs in the future may not have access to all the channel programs available through distributors. While the distributors may require its solution providers to sign an exclusive distribution agreement with them, that is an issue to be resolved between them, the spokesperson said.
EMC currently has no plan to sign up new distributors, said Ambulos, nor is EMC recruiting new solution providers. The company will work with new partners if they bring in certain skill sets. "But right now the whole strategy is to focus on the top to the bottom end of the pyramid as far as where our partners play to get them to the point where they are able to go out and lead with solutions," he said.
One cloud on solution providers' horizons, however, is EMC's relationship with Dell Computer.
In October, the two signed a five-year, multibillion-dollar deal under which Dell will resell certain Clariion-brand storage systems, bringing Dell into direct competition with many of EMC's solution providers.
"It's a major problem," said Edwards. "Dell gets EMC into the NT space. I'm sure EMC was giving Dell better prices than it was giving us. So us little guys complained, and word on the street is EMC now gives Dell the same price as us. This helps. But Dell sells on two to three points of margin. I can't. At 10 points, I have to stop. If I can't wrap some services around the sale, Dell can take it."
SCOTT CAMPBELL contributed to this story.