Sun's Strategy Shift

Santa Clara, Calif.-based Sun has signaled a small-business retreat by discontinuing its entry-level Opteron- and SPARC-based server distribution relationship with Tech Data. CRN last week broke the news online that the much ballyhooed two-year-old partnership, aimed at making Sun a bigger player in the SMB market, was being terminated.

Meanwhile, StorageTek solution providers used to dealing with Tempe, Ariz.-based Avnet Partner Solutions and San Jose, Calif.-based Bell Microproducts are concerned they will be forced to start over again with a new distributor if Sun consolidates its storage distribution base after acquiring StorageTek.

The Sun and Tech Data partnership in the volume server space, originally touted as a way for Sun to reach small-business resellers, was discontinued about one month ago because it has failed to reach expectations, according to executives at both companies.

Sun now plans to focus more on its enterprise customers, those with at least 1,000 seats, said Jeff Barteld, director of U.S. channel sales at Sun.

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>> 'We are mutually walking away and feel very amicable. This is not a messy divorce. It's just a situation where their business strategy changed.'

Barteld didn&'t characterize the change as a complete abandonment of the SMB space, but instead called it a refocus of resources through its two existing full-line distributors—Access Distribution and Arrow Electronics North American Computer Products&' Sun-focused MOCA subsidiary—which service primarily enterprise and midsize VARs.

“It&'s a question of looking where we can sell servers by the hundreds and thousands, not the ones and twos,” he said. “A question of where we focus our resources. I fully expect to do well in the SMB space where we have resellers focused on SMBs. But the existing traditional Sun base tends to be focused on the upper scale.”

Pete Peterson, vice president of systems product marketing at Clearwater, Fla.-based Tech Data, said, “We are mutually walking away and feel very amicable. This is not a messy divorce. It&'s just a situation where their business strategy changed. We saw growth in that relationship, but not at levels we both wanted and, quite frankly, anticipated when the relationship started.”

Solution providers questioned whether Sun had the resources to effectively reach both SMB and enterprise customers. “You need a strategy for SMB and enterprise, but whether Sun has the resources for both is the $64 million question,” said Dwight Hinkel, CEO of Applied Engineering, Bismarck, N.D. “Not knowing the internal struggles at Sun, if they had a choice to make, they made the right choice with the enterprise focus in the short term.”

One Sun VAR targeting smaller businesses with Sun&'s entry-level servers said that he and his peers don&'t really care whether Sun has a relationship with Tech Data. He said that the distributor primarily dealt with low-end resellers who had no investment in Sun certification and training. “Tech Data&'s original charter was to sell four-way-and-under servers to small resellers,” the solution provider said. “But the four-way-and-under space is a bigger and bigger business. So Sun was creating an unlevel playing field by bringing in smaller resellers to compete with partners like us who made investments in training and services.”

Sun&'s storage distributors and VARs, meanwhile, expressed concern about what the vendor would do with Avnet and Bell Micro. The two, along with Sun legacy partner Access, were key StorageTek distributors, while Sun&'s other distributor, MOCA, did not carry StorageTek. “I don&'t see them opening up all four. It&'s a small pipe. You&'ve got four guys competing for customers, and there are not enough resellers in it,” said one distribution executive who requested anonymity.

But another distributor executive said MOCA and Access will keep selling Sun&'s complete product line, and Avnet and Bell Micro will carry the StorageTek line for Sun and other platforms. “More than half of StorageTek&'s channel business is not on Sun&'s platform,” the second distribution executive said. “Access and MOCA don&'t necessarily touch that. ”

Barteld said the StorageTek deal was closed only a couple months ago, and Sun has been waiting to finalize any distribution issues until other issues are addressed. “We&'ve told all our distributors we expect to be able to tell them the details by year-end,” he said. “We&'ve had meetings with Bell and Avnet, and both are extremely competent distributors.”