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Partners: EMC Rebate Changes Mask Back-End Cuts, Emphasize Unity And All-Flash Products, In Run-Up To Dell Merger

The rejiggered rebate program will offer a 1 percent to 2 percent rebate bump to emphasize the stars of EMC's new-school portfolio.

EMC is in the process of tweaking its partner rebate program to refocus it on the product lines that can provide the company the most momentum in the last months before it is acquired by Dell Inc., say solution providers briefed on the changes.

"They're worried about earnings," said a top executive at one large EMC solution provider who wished to remain anonymous. "You've seen margins drop with EMC, and certainly that's been a big hit to us, and the whole storage industry is under more fire than anyone at this point. They want to make sure the VAR community is in line with their go-to-market strategies."

The rejiggered rebate program will offer a 1- to 2-percent rebate bump to emphasize the stars of EMC's new-school portfolio, including the new Unity and VxRail hyper-converged lines, as well as ExtremIO and its new all-flash VMAX and DSSD products and Data Domain, according to solution providers. Still, the increase merely offsets cuts EMC has been making to back-end rebates for traditional product lines like VNX in recent years.

[Related: Q&A: EMC's Jeremy Burton On Dell's EMC Buy, VCE, Cisco And NetApp]

"Dell's going to take them over in August, September, October, and Dell's year-end isn't until January. EMC doesn't want to lose momentum in the meantime, and this is a way to hide the fact that they're reducing back-end rebates, which is a pattern we've seen in the last few years," the solution provider executive said.

Stephen Monteros, vice president of business development at Sigmanet, an Ontario, Calif.-based EMC solution provider, said the result of the rebate increases and cuts is a wash, but the new rebates are still worthwhile.

"I view it as an offset, the net-net is close to a wash," Monteros said. "But there's a reason people are migrating to these technologies, and as a reseller, it encourages you to develop architectures around the new technologies. You know you're supposed to do it, but unless you have some incentive you have the tendency to drag your feet a little bit."

The new rebates are stackable, meaning solution providers can earn more by combining the technologies EMC is trying to emphasize. For Sigmanet, that means ExtremIO and/or Unity with a heavy emphasis on all-flash, along with cloud tier technology with Data Domain and the ability to ship "cold data" to the public cloud.

Despite the benefits, It isn't always easy to get solution providers to think about stacking, Monteros said. "The person who buys the complete package was happier, it's a more complete experience, it's more useful. But in this industry, people have the tendency to get in and get out," he said.

EMC executives did not return messages seeking comment for this story.

EMC is a dominant presence in the worldwide storage market, claiming a 21.5 percent market share in the fourth quarter of 2015, according to IDC. But the company's $2.2 billion in storage revenue that quarter was a 5.2 percent year-over-year decline.

The Hopkinton, Mass.-based data storage giant reported first quarter revenue of $5.5 billion, a 2 percent decline year-over-year, along with a profit of $603 million, flat with the same period a year ago.

Customers have shifted spending toward software-defined, server-based and cloud storage perhaps faster than legacy hardware vendors anticipated, forcing companies like EMC to adjust.

Despite the pending $60 billion-plus merger, which is expected to close before the end of October, one Dell executive told CRN that Dell Chairman and CEO Michael Dell didn't have any input to EMC's rebate program adjustments, saying EMC executives are expected to run the company's business as they see fit until the acquisition closes.

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