IBM Loses Touch With Some Key Partners

What's going on with IBM?

That's a question a significant number of SMB solution providers are asking these days as they perceive a looming vacuum in their relationship with a once-strategic partner.

Some former exclusive IBM Business Partners say the vendor too often treats them as employees rather than customers. What's more, IBM's sale of its PC business to Lenovo two years ago resulted in the vendor losing touch with many SMB solution providers.

While its ThinkPad business has transitioned to Lenovo, IBM has largely failed to retain its industry-standard server business with those same solution providers and has not mounted a successful effort to transition them to selling other IBM products such as software, storage or midrange servers.

"IBM doesn't understand that there is such a thing as a 10-user network that needs a bombproof, reliable server and that their server could fit those customers' needs quite nicely," said Michael Demars, president of Competitive Computers, an IBM Premier Business Partner in Claremont, N.H. "I put servers in those types of companies every day, but that space is not on IBM's radar."

Still, Demars, who says he has a strong and growing relationship with Lenovo, said IBM servers are technically phenomenal and he won't walk away from the company. "We'll keep working with them, but they are not picking up new partners," he said.

Other SMB solution providers that sold IBM System x servers, desktops and ThinkPads said they are divorcing themselves from the Armonk, N.Y., company.

"We used to do between $500,000 and $1 million in IBM [servers, desktops and laptops]," said one Midwestern solution provider who asked not to be identified.

The VAR, which has annual revenue in excess of $10 million, said that since the sale of IBM's PC business to Lenovo, he has not seen his IBM rep in his store and he has stopped selling IBM servers and storage products.

"When they ignore you, business goes down," he said. "IBM servers are great products, but they aren't price-competitive against [Hewlett-Packard]. When you have two A-class servers and IBM's is priced significantly higher, we decided to give up selling IBM servers and storage. I haven't announced to them that we are not selling their products, but we're not."

IBM's worldwide channel chief, Ravi Marwaha, has promised that IBM will fix any field-rep coverage problems.

"If there is any feeling that our coverage has declined and it is affecting our business, we will fix it," Marwaha said in an interview with CRN after an address at distributor Ingram Micro's VentureTech Network Spring Invitational last month in Nashville, Tenn. "We have already increased our sales force into the reseller community."

Marwaha, however, stressed that IBM is having success with the channel. And he said IBM plans to shift more benefits to smaller partners.

He praised Ingram Micro for helping drive a tight partnership with VARs and said IBM server sales through Ingram Micro's VARs are up 15 percent in the fourth quarter; sales of IBM ServicePac Services are up 15 percent; and IBM Express product sales are up 150 percent in the past year.

"The objective is not coverage. The objective is success," Marwaha said. If [VARs] feel that there are things that IBM could do to be even more successful, they know how to get in touch with me."

NEXT: Some partners play hard ball

Troy Webb, chief marketing officer at Incentric Solutions, an IBM Premier Business Partner in Holly Springs, N.C., took a hard-line stance when Incentric's relationship with IBM deteriorated.

"What was our opportunity to protest?" he said. "Our opportunity was to add other [vendor] partners."

Webb notes that the sale of IBM's PC business had little impact on Incentric, which focuses on communications and collaboration consulting services and primarily sells IBM software.

"For the first two years that we worked with IBM, they were excited to have us as partners and kept asking us how they could help," he said. But during the past two years, he said, the relationship suffered because IBM kept changing policies and procedures, which made it difficult to work with.

As a result, IBM sales began to decline, reaching their low point last year. During the slide, Webb said, IBM quit treating Incentric like a partner and instead began viewing the company "like they thought we were their employees."

Webb dropped his IBM exclusivity last year and began partnering with BEA Systems, Microsoft and Red Hat. And ironically, since the first of the year, both his IBM business and his once-rocky relationship show marked improvement.

"We've started working with Red Hat and they give us leads. Red Hat really doesn't sell middleware so we've had opportunities to sell IBM there," he said. "We've started selling best- of-breed and IBM often pops up as best-of-breed. We have more opportunities to sell IBM now than we have had in the past two years."

Once Incentric became multivendor, IBM stood up and took notice, Webb said. "It was like, 'These guys have alternatives,' " he said. "It was a humbling experience on both sides, but we treat them better and they treat us better."