Phoenix Burns Partners by Going Direct

BIOS backup firmware

The company that once dominated the BIOS market has suffered two consecutive quarters of lower earnings and its annual revenues dropped more than $20 million from June 2005 to June 2006. To stem the losses, Phoenix in early September brought in turnaround specialist Woodson Hobbs as CEO and president, and just last week hired Richard Arnold to serve as executive vice president of strategy and corporate development.

In a letter to partners, Eric Newman, the company's vice president and general manager of North America and EMEA operations, outlined in terse terms Phoenix's precarious position and the need to return the company to financial stability.

"After a period of diligence on products and long-term strategy, we have determined that Phoenix will focus on a vision that expands on our legacy delivery of quality BIOS and embedded solutions," Newman wrote.

The strategy shift means Phoenix will only support its OEM and ISV partners. Channel resellers who have been pushing Phoenix's RecoveryPro and ImageCast software packages are now without support for their existing install base.

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"These changes will allow Phoenix to focus additional resources on the 'innovation at the core' mission," Newman wrote.

Calls to Phoenix for additional comment were not returned.

Phoenix only recently launched a push to recruit partners in the B2B and public sector channels. The company made its presence known at recent XChange events, also operated by the CMP Channel Group, and won several awards. As recently as 15 days ago, Phoenix issued a press release for its CMP XChange XCellence Award as for Most Innovative Technology Category stating, "Phoenix continues to impress channel partners."

The company's partners are anything but impressed. News of the Trusted Partner Network's cancellation caught many off guard. Worse, the newly recruited partners are left holding the bag for supporting scores of Phoenix licenses.

"What's happening now? I've got customers that we have sold maintenance agreements to that aren't going to be support. I'm going to support it in house," said Mark Brown, CEO of Total Networking Solutions, a New Jersey-based Phoenix reseller.

Brown was one of several solution providers recruited by Phoenix last spring. Since joining the Trusted Partner Network last March, he's invested more than $40,000 in training and certification, and retooled his white-box business to include versions of RecoveryPro standard. He's sold more than 200 RecoveryPro and ImageCast to date.

"All the stuff they sold us on has gone out the window," Brown said.

As of this posting, Phoenix's partner Web site was still live and providing information on finding and becoming a Phoenix reseller. One of the tenants it proudly lists as a reason for becoming a Phoenix partner is "Channel Commitment: maintain confidence in a partnership with Phoenix; the channel-only sales model is dedicated to helping partners achieve their goals."

Phoenix is one of the oldest PC support vendors in the business, and once claimed to be the largest firmware supplier to OEMs. In recent years, it has attempt to break out beyond its core by adopting innovative security and disaster recovery applications on the firmware level.

What the future holds for the company is difficult to say, however the appointment of Hobbs may provide some clues. Hobbs has a long history of leading troubled companies—including FaceTime, Tradenable, BigBook and Intellisync—either to liquidation or acquisition.