Sources: Arista CEO Makes Channel Cuts, Channel Chief Steps Aside

Arista Networks CEO Jayshree Ullal has made channel field reps and inside channel sales team cuts in North America as part of a shift to place a greater emphasis on outbound direct sales, multiple sources told CRN.

"It's coming from the top, [CEO] Jayshree Ullal. She really doesn't believe in the channel," said an executive at an Elite Arista solution provider, who asked not to be identified. "The channel person that we had was doing double duty managing the channel. Eventually they said, 'Don't worry about the channel.' "

Todd Dalton, channel sales lead and sales executive at Arista, the leading channel advocate for Arista in North America, recently left the company in the wake of the strategic shift, sources said. An Arista spokesperson declined to comment on "personnel questions." However, when CRN contacted Arista headquarters, a representative confirmed Dalton no longer works at the company. Sources told CRN that Arista does not plan to replace Dalton.

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Dalton managed a North American channel team consisting of eight channel field sales reps and eight inside channel sales reps, according to data Arista submitted to the 2014 CRN Partner Program Guide, the most recent year for which data is available. It's unclear how many remain.

"Arista is very customer-driven and views the channel as an important enabler," said Mark Foss, senior vice president of global marketing and operations for Arista, in a statement provided to CRN. "Internationally we are mostly channel focused while domestically, it's a hybrid model of both. Our sales strategy and go-to-market remains unchanged and steadfast for several years."

A spokesperson declined to comment directly on whether Santa Clara, Calif.-based Arista cut its channel and inside sales teams to place a greater emphasis on direct sales. The fast-growing networking vendor has 100-plus partners who add "significant value" for Arista, the spokesperson said.

Another channel partner executive from a CRN Solution Provider 500 company who did not want to be identified said he was not surprised by the shift to place a greater emphasis on direct sales.

"They have a partner program in place, but it's really just a contract saying we have the ability to resell their technology. There's no marketing team in place to support the channel," said the executive.

Solution providers said Mark Smith, Arista senior vice president of worldwide sales operations, who is still with the company, has been a channel proponent but has run into opposition from Ullal.

"Mark is a great channel guy, but he's got no power," said the Elite Arista partner executive. "He thought he would be able to develop the partner program, but he's getting a lot of pushback from the CEO."

An Authorized Arista partner, who did not want to be identified, said he expects a strategic shift to negatively impact Arista's enterprise networking ambitions. "This would be extremely bad," he said.

Solution providers say Arista has been hobbled by channel conflict, with direct sales teams attempting to take larger deals direct.

"Knowing what the situation is over there, we really have to pick our spots on who we work with, what type of customers we go after, and really protect ourselves," said the Elite Arista partner executive. "Any time we do a [commercial] deal with them and it's a non-named account -- $0 to 250,000 bucks -- no problem, we make good margins, no one bugs us over there. But if it gets bigger than that, then they start sticking their nose in it. "

Arista also deters partners from selling to anyone the vendor deems as an alliance technology partner, he said.

"Any one of their alliance partners, like a Palo Alto Networks -- someone with a complementary technology that they can partner with and have some sort of marketing agreement with -- they don’t let anybody [in the channel] sell to those companies, or they really try to deter you from selling to those companies even if you find a net new opportunity in that company," he said.

Arista posted sales of $837.6 million for 2015, up more than 43 percent from 2014, and a profit of $121.1 million, up 39 percent from the year before.

Research firm Gartner said Arista is "by far" the fastest-growing vendor in the data center networking space, ranking Arista as one of only two companies in 2015, alongside Cisco, as "leaders" in the market. Arista made its public trading debut on the New York Stock Exchange in June 2014 with great success.

"They have great technology, really kick-ass products -- terrible channel program," said the executive listed on the CRN SP500 list.

Many of Arista's top executives previously worked at Cisco, including Ullal, who spent 15 years at the San Jose, Calif.-based networking leader before taking over the helm at Arista in 2008.

The two companies have also been battling in court since December 2014 after Cisco filed two patent lawsuits against Arista, saying the company infringed on a number of its patents and had stolen Cisco-copyrighted material.

Several Cisco channel partners told CRN they rarely see competition from Arista solution providers in the sales trenches.

"The only time I ever see them is in some very specific use cases, like high-frequency trading floor or very-low-latency-type requirements," said Ethan Simmons, vice president, East, for Dallas-based Lumenate, a Cisco partner ranked No. 145 on the CRN 2015 Solution Provider 500. "But in the traditional Fortune 1000 data centers, I don't see Arista a whole lot."