The 10 Biggest Channel Stories Of 2011

Channel Changes

It was another busy year for the channel in 2011, with plenty of blockbuster moves, head-scratching decisions and ground-shaking trends. From major channel pushes from Dell and Apple to baffling moves by HP and VMware, CRN looks at the 10 biggest channel stories of the year.

10. Google's Channels Growing Pains

When it comes to Google's channel efforts, there's good news and bad news. The good news is, the search giant made serious strides with partners, thanks to things like the Google Cloud Transformation Program, which gives top Google partners the ability to offer Google cloud services, and a pilot reseller program for Google Chromebooks.

The bad news, however, is that some Google partners have grown frustrated with channel conflict and are pushing for Google to implement measures that will protect resellers from Google's own direct sales. The frustration came to a boiling point during Google's GSocial event in November as Google Apps resellers voiced their concern about competing with the vendor.

9. The New Oracle

Oracle has long been known as an aggressive direct-sales company, while its channel efforts were something of an afterthought. But Oracle's channel efforts really kicked into high gear this year with Mark Hurd, named Oracle president in September 2010, bringing the channel perspective to the executive suite. In his first year Hurd has delineated clear boundaries for direct and indirect sales, developed a new value proposition and distribution strategy for the channel, and boosted operational support for partners.

This year Oracle also began to reap the benefits of its Sun Microsystems acquisition, bolstering its partner roster with solution providers with hardware expertise who helped the company sell its "engineered systems" that combine Sun hardware with Oracle software. Case-in-point is the Oracle Database Appliance the company debuted in September, a channel-only product that has the potential to be a blockbuster and was the most visible proof in 2011 that Oracle is a serious channel player.

8. Dell Gains Channel Momentum

It wasn't that long ago that Dell was the arch-enemy of the channel. But the computer maker has drastically changed its business model in recent years by acquiring channel-friendly companies and launching a bona fide partner program.

This year Dell stepped up its channel efforts by recruiting HP VARs who may have been rattled by the uncertainty around HP's Personal Systems Group strategy. The company didn't just target HP partners, either; the computer maker put on a full-court press this year to recruit all kinds of solution providers. Dell also changed its sales approach by focusing less on individual products and more on complete, desktop-to-data center solutions. The efforts appear to be paying off; Dell Founder and CEO Michael Dell says the channel will soon account for 50 percent of his company's commercial sales.

7. Telecom Industry Dials Up Channel

Solution providers might have had a bad experience partnering with the telecom industry in the past, but telco carriers have made a new push for partners this year as the IT industry moves further toward business connectivity services, cloud computing and everything-as-a-service. Players like Verizon, Comcast and Level 3 Communications are luring resellers with the promise of recurring revenue streams and higher margins selling services instead of hardware. Plus, telcos are offering a range of partnering models, from master agents and sub-agents to service providers and integrators.

While carriers are still refining their channel programs and smoothing over the wrinkles of their indirect sales strategies, many networking VARs are responding to the message. And with convergence trend continuing, many more are expected to join.

6. Cisco Restructures, Refocuses

For Cisco, 2011 was a tough year. In the spring, the networking giant announced a major corporate restructuring that saw the closure of Cisco's Flip camera business. Then the company announced its plan to remove $1 billion in operating expenses – as well as a massive workforce reduction to the tune of 13,000 employees.

But there was good news for the channel; Cisco refocused on its core competencies and reaffirmed its commitment to partners with a $75 million investment for channel resources. The company also unveiled its new "partner-led" strategy to increase channel sales in the SMB market. So while Cisco shuttered businesses and laid off thousands of employees this year, many partners say the company actually upped its resources for channel partners.

5. VMware's Pricing Debacle

VMware has emerged as a major force in recent years, leading the charge on data center virtualization. But the company stumbled this year when it announced drastic changes to vSphere licensing with the arrival of vSphere 5. Partners and customers fumed over potential price increases as VMware shifted from its per-CPU pricing model to one that measured physical memory allocated to virtual machines, dubbed vRAM. While VMware CEO Paul Maritz tried to clear the air, saying the vast majority of customers would see no changes to their licensing fees, it did little to cool the anger.

The uproar caused VMware to backtrack; the software maker revised the vRAM pricing scheme so that customers could allocate more memory to their virtual machines. But VMware's strategy to more consumption-based pricing still has partners and customers concerned.

4. The Rise Of Mobility

Tablets and smartphones are everywhere. Mobile devices are flooding the workplace, and the lines between the home and the office blur with the "consumerization" of IT. Meanwhile, IT departments are struggling to adapt to the "bring-your-own-device" trend. Smartphones are becoming more powerful and advanced, and so is the mobile malware that's infecting those devices, too.

The explosion of mobile devices has created huge opportunities for the channel, and not just in terms of reselling, integrating and securing the actual devices either. As smartphones and tablets have grown, so too has demand for network bandwith, data centers and virtualized infrastructure. And let's not forget cloud, too; as devices shrink, they have less space for local storage and applications and therefore rely more on connecting to the cloud. So the littlest devices are driving the biggest trends.

3. Apple Channel Strategy Ripens

During 2011, Apple has hired at least 10 channel executives and mid-level managers whose backgrounds collectively include dozens of years of experience at some of the industry's most channel-focused companies.

One of the new hires is Francois Daumard, a 12-year Microsoft channel veteran who came to Apple in May and is now managing iPhone and iPad channel development. As one of the driving forces behind MTC, Daumard is responsible for recruitment and sales enablement of partners that are looking to deploy mobility solutions on the iPhone and iPad. Apple has also quietly launched the Mobility Technical Competency (MTC), through which solution providers can become members of the Apple Consultants Network and obtain technical services certification for deploying iPhones and iPads on enterprise networks.

2. HP Keeps PC Business

Hewlett Packard partners cheered the company's decision in October not to sell or spin off its $41 billion PC business. HP's move to keep its Personal Systems Group as a part of the company, instead of selling it or spinning it out as a separate company, ended months of speculation about the company's plans for its PC business. HP's PSG decision ends the uncertainty that began when former HP CEO Leo Apotheker announced on August 18 that the computer giant was considering "strategic alternatives" for its PC business.

1. The Channel Grapples With Cloud Business Model

As cloud computing interest and demand continues to grow, solution providers scrambled to find ways to take advantage of the cloud. It isn't the easiest thing for VARs that built businesses on hardware sales to adopt a completely new business model based on selling an amorphous service. But those that do change are known as the "Transformative" solution providers, which according to CRN parent UBM Channel are defined as having no revenue generated from on-premise solutions (Progressive solution providers, meanwhile, have a significant amount of recurring revenue from off-premise services like cloud, while Vintage solution providers earn almost all of their revenue from on-premise sales).

Transformative solution providers are leading the cloud computing charge that's forever changing the channel business, moving it further away from product reselling and more toward service providing. The channel will never be the same.