VMware Segments Marketing, Services To Help VARs Reach Clients

VMware is totally dependent on its channel partners to grow, and is putting new programs and services in place to help it and its solution providers grow.

That's the message from Carl Eschenbach, co-president of VMware's customer operations, who used his keynote presentation at this week's VMware Partner Exchange conference to discuss plans for making his company a partner-led organization.

Improving channel partnerships is important to a company like VMware where 85 percent of its total 2011 revenue came from solution providers and where a miniscule less than 3 percent of 2011 revenue came from direct implementation of services, Eschenbach said.

"It's impossible to grow a business (at the rate we are growing) without a converged model," he said. "We don't say, you are an extension of our sales force. You are our sales force. We are a channel-led company."

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Businesses are moving fast to adopt cloud computing as they want to move from managing physical infrastructures to architectures which drive out IT costs and lets them focus on top-line revenue growth instead of on cost control, Eschenbach said.

To help drive customer momentum will require new services that provide repeatable processes to help customers move from virtualized test-development environments to full virtualization to the cloud, he said. However, customers cant make the move on their own. "The skill set does not exist today in their organizations," he said.

There are services for helping customers move from physical to virtualized environments, but the business opportunities are quite limited, Eschenbach said. "Services opportunities grow as we help customers move from cap-ex (capital expenditure) to op-ex (operations expenditure) savings," he said.

To help get partners more involved in helping customers move to the cloud and provide the services needed to do so, VMware is for the first time planning a marketing campaign focused on market segmentations.

VMware will at the same time provide partners with materials needed to help customers not only take their first steps towards the cloud but also first turn to their local solution providers to do so, Eschenbach said.

"It is our responsibility to help them think about the architecture of the future," he said. "We want customers to think of VMware as the incumbent vendor. We want this to be a 'duh' decision."

VMware is also for the first time aggressively focusing on the SMB market with a new advertising campaign targeting over 3 million users at over 600,000 SMB companies, Eschenbach said. This new campaign follows Tuesday's introduction of new incentives aimed at getting solution providers to work with SMBs.

VMware is also segmenting how it goes to market with different customer levels.

At the enterprise level, which VMware defines as customers with 5,000 or more personnel, VMware will lead sales but bring in partners to handle support.

For commercial customers, or those with 1,000 to 4,999 users, VMware is building out a new organization that will work hand-in-hand on taking the lead with such accounts.

The SMB business will be completely partner-led and VMware supported via a new organization within the company, Eschenbach said. To move this part of the business forward, VMware has increased its SMB marketing and support budget by 25 percent over last year, and has already hired 40 people to help in the effort.

"We're gonna leverage the heck out of you to drive our inside-out approach to this segment," he said.

Next: New Bonuses And Services Opportunities For Partners

VMware has also introduced new competencies for partners, and provided new bonuses for those who take advantage of their training. Eschenbach said that getting trained in a new competency which is then used to generate new business with a new or existing customer will provide the solution provider an one-time additional 10-percent rebate on top of the normal 10-percent partner bonus. VMware is also introducing a new 10-percent bonus on new accounts.

Partners who use their new competencies on new accounts are eligible for a stacked 30-percent bonus, he said.

Services are being segmented as well, Eschenbach said.

Customers at the enterprise level will typically receive services directly from VMware, a move which helps VMware better understand customer requirements, develop new ways to provide services, and take what was learned to solution providers, he said.

Eschenbach emphasized that direct services revenue is miniscule. "We are not in this business to compete with you," he said.