BakBone's New Linux, Solaris Focus Concerns VARs
Solution providers attending the San Diego conference were generally upbeat about the channel credentials of BakBone, which competes with storage software makers such as Symantec, EMC, IBM Tivoli and CommVault. However, they expressed concern about BakBone's plan to make a big push in the Solaris market via a reseller agreement with Sun Microsystems, which is expected to take effect this summer, as well as the vendor's move to hitch its branding strategy to Linux.
Those concerns come on top of a feeling among channel partners that San Diego-based BakBone will be acquired by Sun -- sooner rather than later.
In December, BakBone filed a Form 8-K with the Securities and Exchange Commission that said Sun and BakBone will negotiate in good faith on an agreement in which Sun will have the right to "purchase authorized but unissued common shares of [BakBone] on terms and subject to conditions to be specified."
Though BakBone didn't address the issue of Sun's possible investment in or acquisition of the company, channel partners said they worried that a Sun acquisition of BakBone would cause the company to lose focus on its Windows-based data protection business.
Ken Horner, BakBone's senior vice president of corporate development and strategy, told CRN that his company and Sun has an agreement under which Sun is expected to make BakBone software available to its channel partners sometime before the end of this quarter. However, he said the Sun relationship shouldn't impact sales of the company's channel partners.
"There will be level and equal playing fields," Horner said. "We are painstakingly ensuring the same level of pricing for solution providers who work with BakBone and with Sun. Partners may ask, 'Will Sun undercut me on BakBone sales?' I can say, absolutely not. We'd be really surprised to see a difference in pricing at the street level."
During his opening keynote address at the summit, Horner also unveiled BakBone's plan to rebrand itself with a new focus on its Linux expertise. He said research firm Gartner estimates Linux to be growing at an annual rate of 35 percent, and researcher Saugatuck Technology expects 50 percent of all enterprise data centers to be using Linux to support mission-critical applications by 2011.
This year, BakBone wants to own the Linux platform in the data protection realm, with a full range of technology that includes backup and restore, performance management, continuous data protection (CDP) and more, according to Horner.
"Windows is important. Solaris is important. But the real growth opportunity is to land around Linux," he said.
Horner later told CRN that BakBone is happy with its Windows-based software sales. "But Linux as a market is one-tenth of the Windows market," he said. "And it's growing, so we see a better opportunity to compete in Linux at the ground level. We don't expect the Linux market to be the same size as the Windows market. But we'll have a more competitive offering in Linux than our competitors."
Both the Sun reseller agreement and the Linux focus caused disagreement among solution providers, most of whom said they think BakBone is doing well in the much larger Windows market.
John Zammett, president of HorizonTek, a Huntington, N.Y.-based storage solution provider, said it's hard to imagine a Sun reseller deal not affecting his BakBone sales. "In the New York market especially, everybody gets shopped," he said. "If the customer's purchasing agent knows he can source from Sun, it will lower our profitability substantially." On the other hand, such a deal brings credibility to BakBone, said Maury Granger, vice president of sales at VeriStor Systems, an Atlanta-based solution provider specializing in storage. "The positive is, it brands BakBone even further," he said. "When customers ask who BakBone is, they are asking for credibility. We can say BakBone has Sun or whoever as an OEM. It's no big secret that vendors need OEMs to grow big. For me, it's all about credibility."
BakBone's push to wrap its brand around Linux isn't a bad idea, according to Granger. "We see a lot of Linux, but that's not why we sell BakBone," he said. "Linux is really lowering the cost of test and development or letting people build a secondary database at one-tenth of the cost of Oracle. BakBone sees the customer base for Linux is growing. So this is a chance to get the word out. Is it a good or bad idea? It's neither here nor there. If Linux is a good way to get the BakBone name out there, that's good."
Not so said Zammett, who feels that even though BakBone needs help marketing itself, the company's move to anchor its brand on Linux may not be the answer.
"I'm not so sure how effective it will be," Zammett said. "A lot of customers in New York don't use Linux. So I don't know how it will affect sales. But BakBone has no branding. The company is one of the best-kept secrets. They don't market themselves."
Several solution providers praised BakBone for its attention to the channel but stopped short when the discussion turned to maintenance renewals. When asked why BakBone doesn't give solution providers free reign in reselling maintenance renewals after the initial sale, Horner said his company is looking at ways to make it easier for the channel to increase its participation in the renewals business.
"When we left it to the channel, it wasn't a high-enough dollar thing for the channel," Horner said. "There are lots of followups, phone calls and so on. But our maintenance policy is always under review. We want to be able to reward our partners."
John Thome Jr., vice president Chi, a Cleveland-based solution provider, said channel partners are very interested in maintenance renewals and that all of his other vendors give him that opportunity.
"It's very important," Thome said. "These are our customers. We should be selling to our customers. So why is BakBone selling to our customers?"
Zammet called BakBone's maintenance renewal policy a mistake. "We lose out on the maintenance revenue, but we still need to support our customers," he said. "It becomes overhead for us, for which there is no revenue. We sell maintenance contracts for everybody. It's a profit center for us. Not a big one, but it's recurring revenue."
Jim Johnson, president and CEO of BakBone, said solution providers get more out of selling services for the company's software than they would for selling maintenance renewals.
"We always try to push services to the channel," Johnson said. "We have no services group. We do training and education, and that's it."
Going forward, BakBone expects to continue to integrate its various data protection point solutions into more complete solutions, Horner said. The company has already integrated its NetVault: Report Manager with its NetVault: Backup software so that reports generated by the former are seamlessly available to the latter.
The company also expects to integrate its CDP technology with its NetVault: Replicator data replication software in the second or third quarter, Horner added. "We won't look at this as data backup but as backing up from disk to disk, with one view of the data across three tiers of storage," he said. "It will be integrated into a seamless view."