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Partners Not Worried About Dell Deal To Resell SonicWall After Private Equity Sale

Partners of SonicWall say they aren't concerned about sales competition with Dell despite a key executive saying the vendor will act as a VAR for the network security solutions provider following its planned sale to private equity investors.

In an email to partners Monday, which was viewed by CRN, Curtis Hutcheson, Dell Security's vice president and general manager, said SonicWall will maintain an "OEM agreement in place with Dell to enable them to sell and support SonicWall network security solutions as a VAR."

[Related: Dell Agrees To Offload Software Business To Elliott Management, Francisco Partners]

While it's possible the arrangement could stoke channel conflict between SonicWall partners and Dell, solution providers said the relationship harkens back to SonicWall's glory days under private equity ownership by Thoma Bravo. Dell bought SonicWall from ThomaBravo in 2012 for about $1.2 billion.

"There's certainly the chance for conflict, but I don't think this perpetuates conflict," said Michael Crean, president of Solutions Granted, a Woodbridge, Va.-based Dell partner. Before Dell assumed ownership, "SonicWall was aggressive in the marketplace under Thoma Bravo and Dell was just a partner," Crean said. "Those years were the best of our lives. This should work the same way."

"This is going to be very good for the overall SonicWall community, to get back to the way we're used to doing business," Crean said. "It empowers SonicWall to become more nimble. The Dells of the world aren't the biggest innovators creating the next big thing; they acquire the next big thing. Smaller organizations can go after things in a very fast, strategic fashion."

Michael Goldstein, CEO of Fort Lauderdale, Fla.-based LAN Infotech, agreed, saying that he didn't expect the shift to impact the way he buys the solution or his relationship with Dell as he sourced SonicWall primarily through distribution.

"I don't see it as a threat," Goldstein said.

Jane Wright, principal analyst for security at Technology Business Research, said she thinks the acquisition will allow SonicWall to position itself better in a decelerating market for network security solutions. She said she expects SonicWall to adopt new approaches that previously could have been considered competitive, such as integrating its network security features into other vendors' endpoint threat detection or DLP solutions.

"I think SonicWall is going to end up with more autonomy to take steps that would not have made sense under Dell ownership," Wright said.


In his letter to partners, Hutcheson said the move will allow SonicWall to provide a "more tailored experience" to its more than 20,000 security VAR partners globally. He said partners can expect to see SonicWall "accelerate the move of our partner management programs and tools back to SonicWall," and see continue investment to create "world-class network security and identity management solutions."

"We believe it’s time for IT security leaders to re-think their approach and say ’Yes’ to initiatives that enable innovation and create competitive advantages. Now, with the backing of Francisco Partners, we are even more committed to lead in this space and continue our investments to drive the world’s best security solutions, and continue helping our customers become a Department of YES," Hutcheson said in the letter.

Other divisions involved in the Dell Software Group sale include Quest Software and Statistica, but not Dell's Boomi cloud integration business. Francisco Partners teamed up with Evergreen Coast Capital, the newly formed private equity arm of activist hedge fund Elliott Management, to acquire the group in a deal worth more than $2 billion, according to a Reuters report.

The deal comes as Dell is selling off assets to help offset the cost of its more-than $62 billion acquisition of EMC. The Round Rock, Texas-based company is prepared to take on as much as $49.5 billion in debt to make the acquisition work. It reached an agreement in March to sell its Perot Systems IT services business to Japan-based NTT for about $3 billion. And in April, it raised about $112 million when it brought its SecureWorks business to an initial public offering.

Goldstein said he hopes the Dell Software Group sale, including the SonicWall assets, will help the company clarify its strategy after the EMC deal is complete, and how those assets will fit into a combined portfolio.

"It just leaves you a little mind boggled to figure out where this is all going. I think all of us [are] sitting there waiting for a period at the end of a sentence for EMC. I guess this just goes out there and brings more money to the table," Goldstein said.

Dell's acquisition of EMC is expected to close before the end of October. EMC shareholders are scheduled to vote on the transaction July 19. The company is also awaiting antitrust approval from Chinese regulators.

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