Responsiveness Wins Respect

Despite several new disk-drive classes being released, there's very little to differentiate the major players on price, performance and features. That is what makes partner loyalty extremely important in the 2005 VARBusiness Annual Report Card (ARC) Enterprise Disk Drives category.

Indeed, loyalty helped Seagate clinch an ARC tie with last year's sole winner, Maxtor.

For its part, Maxtor had its own upheaval to contend with, including a black eye for defective drives sold to one of its key OEM partners--Dell. Maxtor also went through several CFOs and ousted CEO Paul Tufano, who analysts say was impeding Maxtor's progress. Tufano was replaced by former Maxtor chairman C.S. Park, who was the company's CEO in the mid-1990s.

Despite those setbacks last year and Seagate's strong partner loyalty, Maxtor held its own, outpacing Seagate in the Partnership and Support categories. Ironically, Seagate partners said their loyalty is based on Seagate's responsiveness and ease of doing business.

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"As a channel partner, they've really come to the table ready to give us everything we could possibly want," says Natasha Wickie, a sales associate at Gibraltar Solutions, a Mississauga, Ontario-based IT-services and systems builder. "They are really good with customer service and support."

That is no coincidence, says Jennifer Bradfield, Seagate's director of channel marketing for the Americas. In addition to a new channel program launched in February, Seagate is emphasizing new levels of support, including a new partner portal, rebates and deeply discounted evaluation of new drives.

The focus on bringing channel partners to the table is a shift for Seagate, according to Bradfield. She adds that key OEM partners in the past were given priority over channel partners.

"There's a general recognition within our design centers that if you look at adoption of new products and new technologies, the real early adopters do tend to come from the channel," Bradfield says. "Then, you have the mainstream OEM adoption, and then the rest of the world."

As part of its new partner program, Seagate has opened its design centers, previously available only to key OEMs and systems builders. Although it's fee-based, channel partners are permitted in at a substantial discount--often as much as 75 percent less--to what they would pay at third-party facilities.

Maxtor revamped its channel program two-and-a-half years ago, though only in the past year has it fully gained critical mass, says John Vossoughi, the company's vice president of worldwide distribution. Maxtor's VIP program allows partners to return up to 100 drives at a time with replacements promised within 72 hours.

"It's been a big campaign of mine, which is: Let's not just offer something to feel good, but let's offer something that people can use," Vossoughi says.

Among other things, Vossoughi is focusing on demand-generation, which has increasingly moved from the domain of distributors to that of the suppliers.

"It's our job to do the demand generation in the market, so we've taken on that responsibility," Vossoughi says.

Vossoughi is troubled that Seagate, the largest supplier of hard drives, has a far more loyal partner base than Maxtor, and vows to do something about it.

"It's not easy to get loyalty in a commodity marketplace, but I'm not going to give up on it," Vossoughi says. "We're going to be very focused on gaining the No. 1 position on loyalty."

No doubt the field should be wide- open. All of the key vendors are rolling out new drives based on an improved Serial ATA (SATA) spec that offers 3-Gbps throughput. The market for drives on Serial Attached SCSI is expected to ramp up next quarter and well into next year.