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Symantec Takes Big Deals, Renewals Direct

Symantec is retreating from its position as a channel-focused company and taking both new deals and license renewals from partners in a move to cut go-to-market costs, ChannelWeb has learned.

Once hailed by many as the constant friend of the channel, Symantec is making moves to take its largest 900 customers from partners and hand them over to its direct sales team and take over subscription renewals for SMB customers.

In a June 12 private conference between company execs and about 20 Wall Street analysts, Symantec COO Enrique Salem said the moves would "drive efficiency and reduce the overall cost structure in our go-to-market capabilities," according to a transcript of the meeting viewed by ChannelWeb.

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Symantec COO Enrique Salem

"Symantec over the last 25 years has been very focused on a two-tier distribution strategy, But as we've built out a very strong direct salesforce where we're heavily engaged with each customer, it doesn't make sense to continue to leverage both a distributor and a partner to serve let's say, the seven, eight, 900 largest customers in the world," Salem said in the transcript. "So those deals will now give the customer the option to go direct. Again just simplifying our channel go-to-market for the largest companies in the world."

Several Symantec partners expressed shock at Salem's statements in the transcript, but said they do explain some changes in how Symantec has been dealing with partners lately. While one platinum partner said that he hadn't been notified of any changes in how Symantec goes to market with partners, he said that within the last month he has lost some deals after Symantec reps informed him that some of his company's clients wanted to buy direct.

"When we try to follow up, we don't necessarily see the large clients wanting to go direct," the partner said. "Maybe the reps aren't getting their dollar for dollar renewals, and they're trying to get every dollar that they can."

Another platinum partner said Symantec has recently taken some of his higher-end deals direct at the last minute, but promised to compensate him on the back end.

"Would I have made the same amount as if I closed it?" the partner asked. "It's a very clean cut decision on how much everybody makes when I take the deal down. What is not clear is when they say, 'we'll make it right by you,' what percentage you actually make. There's a high probability it won't be as much."

The channel changes at Symantec don't stop with the largest customers. In the meeting with financial analysts, Salem said Symantec hopes to automate much of the company's SMB business, especially around software license renewals.

"About 70 percent of our consumer business is now done electronically," Salem said in the transcript of the meeting. "We believe the same is true in the SMB segment, where we can automate or simplify the renewal process for any of our products like Backup Exec and Symantec endpoint protection, ultimately driving more efficiency but higher renewal rates."

For partners serving the SMB market, those automated renewals are a "cost-effective" measure for Symantec that would essentially undermine a partner's ability to count on a recurring revenue stream from customer subscriptions for an array of backup and end-point products.

Several SMB-focused Symantec partners told ChannelWeb they already have seen Symantec stepping in and taking over software renewals before the anticipated expiration date -- particularly in what are typically considered "bread and butter" areas such as antivirus and other must-have endpoint protection products.

One anti-virus partner confirmed that Symantec had already started taking his clients' renewals before the contract had expired. Before the recent change, he said Symantec would go after license and support renewals only if the agreements had expired and the partner was not able to renew them. "If you don't land a deal, then all's fair," the partner said.

Symantec did not respond to ChannelWeb requests for comment by end of business Monday.

While Symantec maintains that it is implementing measures that will ultimately save money and streamline processes, many partners said the company's new policies could eliminate numerous other sales and irreparably damage partner trust and confidence.

"They'll get the one sale, but they will lose out on the second one," said a top level Symantec partner. "They will have better coverage on that one sale, but they will have less coverage across the board from those other organizations. From the standpoint that Symantec has been preaching for years, it's a 'channel-friendly, channel-only' organization. It just surprised me to hear that they have moved from that philosophy."

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