Insights, Ironies And Intrigues of The ARC

Oh My, Brad
If there ever was an ARC Achilles-Heel award for 2004, it would go to BEA. Talk about having a glaring weakness: Of the more than 70 different product and service programs we analyzed this year, BEA scored the absolute lowest when it came to loyalty. That's right, partners said their loyalty to BEA, a high-end software company, was lower than the loyalty that others had for disk drives, displays and even entry-level servers--commodity-oriented products whose value proposition is often difficult to distinguish from one another. But a high-end software-development environment and platform? Surely that is a differentiated play that would command the loyalty of some partners, despite the company's stock swoon (off roughly 40 percent this year), product roadmap changes (is it a platform or merely an environment?) and executive defections (think former senior vice president and channel chief Mercedes Ellison, who recently bolted for Hyperion). Recently, BEA scheduled an offsite gathering in beautiful Carmel, Calif. There, Bobby Napiltonia, vice president and general manager of worldwide channels and alliances, was slated to plead his case as to why partners should remain loyal to BEA, which received high scores this year for product innovation. Partners already onboard seem encouraged by the company's technology. But without loyalty, that kind of product reliability means little.

How Ironic...
...is it that the only thing the world's largest communication company can communicate is its ineffectiveness? When it comes to communicating to the channel, partners gave AT&T the lowest scores of any company in the entire study: a whopping 39. That was 44 points less than what the best communicator, Samsung, received. What makes AT&T's score even more embarrassing is how simple today's communications technologies and services make it to reach out and, shall we say, touch someone. PRM. E-mail. Web portals. Face-to-face visits. Advertising, for goodness sake! Does AT&T do any of these things well when it comes to partners? Nope. AT&T is the king of the worst. And it doesn't just stop there. AT&T is also the worst when it comes to channel conflict, ease of doing business and partnership, in general, too--not that we are keeping score. (Well, actually we are.) But you probably didn't know that because AT&T can't communicate. Ah, rightbut we can bring you the news you need to know.

What Is It About HP...
...that keeps you coming back for more? Seriously: Out of five rivals that competed for top honors in the color network laser printer category, HP ranked dead last when it came to revenue/profit potential among VARs. Last. Its score of 49 points was seven points below the next closest company (Lexmark) and a full 16 points below that of the best company in this criterion (Oki Data). It was also among the lowest in the entire study across all product categories. Yet, HP continues to make market share gains, according to IDC. In the most recent quarter, HP increased its market leadership in the single-function printer market to 51 percent. Category award winner Xerox revamped its Peak Program this year to provide its 2,000 partners with a simplified rebate structure that recognizes the unique value-add they provide to customers. Watch out, HP.

Stranger Things Have Happened, But Where We Do Not Know
Here's something odd: Despite competing in one of the most hotly contested product categories in the entire ARC study, and despite offering products that most consider commodities (Let's be honest. Could you distinguish one brand of a disk drive from another if the names are removed?), Maxtor has done something rather remarkable. Despite its commodity wares, the company finished near the top in revenue/profit potential. That includes the entire study of some 70 different programs. The company's emphasis on software and other aspects distinguishes it from the pack. For example, consider its Maxtor VIP initiative. Customer support was enhanced by creating an online system under MaxServices. MaxtorVIP.com provides local RMA support, product training, engineering updates and other services and materials to support customers. Clever.

The Jerry West Award
No. 44 on the Lakers of yore. Mr. Clutch himself. Never missed a beat when the game was on the line. The 60-foot shot sent Game 3 of the NBA finals to overtime in 1970. Perfect. What's clutch in ARC? How about loyalty, especially in a two-man race, such as our desktop and server processor category, won by Intel. That's a clutch win. When the chips (literally and figuratively here) are down, loyalty matters most when picking a winner. Intel not only ranked ahead of rival AMD in terms of partner loyalty, but also ahead of every other company in the 2004 ARC study. Out of all of them, Intel reigned supreme. Kind of makes you wish for a Pentium 44, no?

Zen Master IBM
Eight wins. Five sweeps. An entire trophy case of glass and stone. That's what IBM took home in 2004. It grabbed top honors in advanced desktop and workstations, entry-level servers, midrange servers, data management software, enterprise storage management software, Web infrastructure and software, network storage and mobile computers. How? One reason the world's largest and most complex company won so many top honors this year was its newfound devotion to Zen-like simplicity. That's right: The answer to "What is IBM putting in that makes its channel partner programs so good?" is what it takes out. This year, IBM announced that PartnerWorld will be streamlined from four-track communities into a single, integrated Business Partner program with consistent offerings and benefits to all business partners. That opened the door for partners to join PartnerWorld at a level based on their total IBM involvement across all IBM brands. IBM introduced a new coverage model for Business Partners that created a single point of contact for each that reduced the number of IBM "touch points" and "redundant activities." Next year, PartnerWorld Feng Shui. We swear.

Microsoft: The Giving Tree
The company known for taking no prisoners may be the most giving of all. Really. Think about it: No one on the planet provides more free training than Microsoft. Same for free support. Not enough? This year the company that loves to take actually added a call-to-action for end users to all of its advertisements: "Please contact a Microsoft partner" How often does that happen? That explains, in part, why we named Allison Watson, Microsoft's vice president of worldwide partner sales and marketing, Channel Executive of the Year. Why else? Well, for one thing, Microsoft, along with Cisco, spends more on channel R&D than virtually anyone. And all that spending--this year the company will invest $1.7 billion in and around channel activities--is leading to new innovation. Take the new ISV Royalty program. It maps out ways ISVs can make money blending Microsoft technology into their solutions. Or how about the new specialization drive? The effort to allow partners to self-define in 11 different disciplines is breakthrough. Want more? How about the badly named but very interesting CompHot offering? It's a formalized escalation program for getting special help closing big deals. Through it, Microsoft partners can secure access to a Microsoft executive for assistance on a joint sales call. Heck, we even hear Microsoft will pick up the tab for lunch at such outings. Thanks, Bill.

One To Watch: Fujitsu
Dead last. That's where Fujitsu finished in this year's enterprise disk drive category of the 2004 ARC. Yet, strangely enough, when we look at what Fujitsu is doing, we think that its partner-satisfaction scores will rise next year. For starters, the company's sales are building momentum, which always makes partners more interested. (This year, the company claims to have increased its market share by approximately 5 percent in both the enterprise and mobile hard drive markets.) Customer head count also grew, in this case by nearly 20 percent over the past year, thanks to the expansion of the field sales team supporting channel accounts. No wonder sales through the channel increased 44 percent last year, significantly more than most. That could be the start of things to come. Consider, for a moment, that Fujitsu recently added distributor Bell Micro, added new field engineers to help partners and increased its MDF and co-op dollars for distribution and channel partners. It has got to do a better job providing marketing support and create a more sophisticated channel partner program. But, otherwise, it's all uphill from here.

The Springboard Award Goes To CA
Rock bottom. Two years ago, CA could not have sunk any lower. It rested right at the bottom of our partner-satisfaction survey in security--fifth out of five. Then it made a breakaway move--up to fourth a year later. Seriously, things began to change. Worldwide channel vice president George Kafkarkou started handing out more leads, prevented direct salespeople from poaching sales and stopped making annual changes that left CA partners dazed and confused. Humble? You bet. Effective, too. Despite a relatively low loyalty score, CA now enjoys the respect and admiration from its partners, at least as far as its partner programs go. If and when it gets its corporate house cleaned up, CA could very well be poised for greater greatness. Not bad for a former cellar dweller.

Falling Down: Symantec, ViewSonic, Lexmark And HP
Some things defy explanation, others beg for it. Several companies stumbled this year--Symantec in security management software, Lexmark in network color printers and HP in network storage. Here's our take: Symantec stumbled after former VARBusiness Channel Executive of the Year Allyson Seelinger was promoted from head of North American channels to head of worldwide channels. Replacement Randy Cochran has not quite stepped up to assume the high-profile role Seelinger played, and that has hurt some. (Its product line also needs to be better integrated.) ViewSonic suffers from fierce competition and a big push by its rivals. Lexmark, well, is trying. Sure, we loved the five-city road show, which touched hundreds of partners directly. But the company's deal with Dell still stings, and its lack of executive support for the channel doesn't win as many converts as it deserves. It's difficult to make friends with an invisible CEO. HP is simply trying to build its direct sales at the expense of its partners. Yes, it says it can grow both at once. No, no one we know has ever done it successfully. In addition to invisible CEOs, partners don't like two-faced ones, either.