Sun Shows Partners Its Silver Lining

Sun has taken more than its share of hits lately from Wall Street and the media, but that hasn't stopped the company from putting its best face on its partner event this week. The iForce Partner Summit in San Diego is hosting Sun distributors and resellers from all over the United States, who came to hear about Sun's renewed commitment to the channel.

By all accounts, the vibe at the conference has been very positive. It began with keynote addresses on Monday, April 19, from president and CEO Jonathan Schwartz and chairman Scott McNealy. McNealy's presentation actually wasn't a canned speech, but a one-on-one interview conducted by a member of the media. The press has been a real thorn in McNealy's side lately, but people who witnessed the keynote came away impressed with his determination.

"I saw a tremendous amount of energy, passion and conviction from Scott; he's determined to make sure Sun's partners see where the market is going and how to get there," says Anna McDermott, CEO of GE Access, a Sun distributor in Westminster, Colo. "Overall, there's been great energy at the event, much more than last year."

Partners in the audience who were watching closely for any chinks in the Sun armor came away impressed with the performances of Schwartz and McNealy. "They did a very good job of talking about their partnerships and the reseller community," says Pete Peterson, vice president of product marketing for systems and software at Tech Data, a Sun distributor in Clearwater, Fla. "Sun seems very committed to this, and all the recent messages have been very consistent."

But the show, which runs through Thursday, April 22, has been about more than just putting a positive spin on things. Sun made a host of announcements this week that will significantly impact its current and future partners. The primary change is a unified channel framework for U.S. partners that should simplify the way they do business. The new architecture integrates the formerly separate systems, software and services partner programs so qualified partners can now sell or deliver Sun's products and services through a single contract and a single point of contact within Sun.The new framework implements three partner levels: Foundation, for entry-level partners focused on the midmarket; Premier, a mid-tier program for existing partners who have made significant investments in selling Sun's entire product line; and Elite, which provides various rewards and incentives for Sun's most dedicated partners in all markets.

The company made several pricing announcements as well, including a new promotion for the Solaris OS on x86 systems. Under this plan, Sun is offering annual volume subscription packages ranging from $50,000 for 100-unit licenses to $800,000 for 2,000-unit subscriptions, including services and support. Sun claims the promotion will make Solaris up to 80 percent cheaper than Windows Server 2003, Standard Edition, and up to 70 percent less than Red Hat Enterprise Linux. The promotion price also enables customers to pay one price for the use of the Solaris OS on any mix of 1-4-way x86 systems.

Sun also announced special pricing for qualified iForce reseller of it Java Enterprise and Desktop Systems. Enterprise System software is now $50 per employee per year and $25 per desktop per year for the Desktop System software. Sun will offer a special promotional program for companies with fewer than 100 employees, enabling them to sign up for a free, one-year runtime license for Java Enterprise System software if they meet the program's criteria and accept the associated terms and conditions.

The goal of all the announcements is to create a simpler, cheaper way for Sun and its partners to drive revenue growth and enter new markets. "When the partner program was divided into hardware, software and services divisions, it was pretty challenging for a partner to do all three with us," says Gary Grimes, Sun's vice president of partner management sales. "Now my group is responsible for all partner types, and we have a unified architecture that makes it a hell of a lot easier to work with Sun."

The unified system should have its most significant impact in the services arena. "A few years ago, partners often were in competition with us on the services side, but we realized that's not the way we wanted to go and we've done a 180 on it," says Larry Baker, senior director of Sun's services partner program.Sun officials hope the new framework will continue to increase the share of business that partners drive. Currently partners are involved in accruing roughly 63 percent of Sun's revenues worldwide, 56 percent in the United States, up from about 42 percent three years ago. Grimes says Sun wants to see this percentage increase, but doesn't have a particular target in mind. "I don't want to say we're shooting for 75 percent if it turns out we'll end up at 80," he says. "The revenue share driven by partners should continue to grow when the engagement model is standardized across the country, but it will seek its own optimal level, like water."

Sun vice president of U.S. sales Bill Cook says the main goal of the new initiative is to underline to partners how integral they are to returning Sun to profitability, something which will be greatly helped by the coming cash influx from the company's recent settlement with Microsoft. "The cold, hard cash certainly helps our war chest, but the bigger story is how it will resolve what has been an irritant for our customers," Cook says. "They're pleased that we'll now be able to figure out ways to make systems more interoperable and help them be more productive. Customers always have perceived us as innovators, and the settlement helps make innovation a safe choice for them. But they don't care whether they're getting blade servers or something else; they care about productivity, interoperability, availability, quality of service and uptime."

Sun's partners say they're looking forward to the efficiencies the new model will bring, especially in the services area. "As hardware platforms evolve, we're seeing more and more commoditization, which propels the need for more services," says Scott Zahl, vice president of marketing and vendor relations for GE Access. "Any negative news from Wall Street doesn't impact our partnership, but it does mean that Sun has to work with them to make sure they understand how Sun continues to be a viable and important piece of the IT industry. The emergence of new Solaris stacks along with the Microsoft settlement and the coming AMD/Opteron products over the coming year should help take Sun into some volume-based markets it's been trying to break into for some time."

The Microsoft settlement also will help Sun as it tries to navigate these new markets. "They'll be the only hardware vendor with that type of relationship with Microsoft," Peterson says. "When two of our larger partners collaborate, it's good for us and good for the channel."