Can't We All Just Get Along? -- A Channel Perspective

Seems that Toni Sacconaghi of Bernstein Research took advantage of Sun’s latest channel brouhaha to note that Sun’s been irritating its channel in a variety of ways for over a year.  Interesting behavior for a company that reportedly takes more than sixty percent of its revenue from the channel.   For example, Sacconaghi points out that commissions were cut on service contracts to government customers, and that Sun put the squeeze on the channel in terms of inventory, all in the name of Sun’s profitability.  We believe in profitability, but we also believe that what goes around comes around; Sacconaghi asserts that several of Sun’s large channel partners have taken on Sun’s competitors, or were considering doing so.  Truth be told, on any given Sunday, Sun’s relationship with its channel is probably not much better and not much worse than any other vendor’s; outcomes in all cases could probably be improved by designing more flexibility into channel programs (see Channel Maven Dave’s Spotlight on why one size doesn’t fit all.).  However, it’s worth pointing out that we believe the resources vendors devote to incrementally tinkering with their channel could probably be better spent in designing marketing programs and initiatives to drive demand for the channel to serve (see Channel Maven Dave’s Spotlight on who really creates demand.)  For his part, Sacconaghi worries that Sun’s cavalier (our word, not his) attitude toward the channel could slow down its revenue momentum in the long run.  Plenty of opportunity for Bill Cate to show his stuff.

 

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