How Channel Mistakes Can Lead to Lost Market Share

By Michael Vizard  |  Posted 2008-09-15 Email Print this article Print
 
 
 
 
 
 
 

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In recent months there has been a lot of consternation in the channel over vendors eliminating margins in the storage archival space, while other vendors have been taken to task for trying to cut partners out of the software license renewal business. Vendors Panda Security and Tangent are looking to take advantage of their competitors' missteps while winning over their solution provider partners.

One of the maxims of Napoleon is to never interrupt your enemy when they are making a mistake.

In recent months there has been a lot of consternation in the channel over vendors eliminating margins in the storage archival space, while other vendors have been taken to task for trying to cut partners out of the software license renewal business.

Fortunately, every action tends to create an equal and opposite reaction. In the case of the channel, that usually means a vendor comes along to leverage the mistakes of a rival in order to gain greater allegiance among channel partners.

Case in point is a company called Tangent that this week is announcing a new DataCove storage archival service. Tangent has been selling storage archive appliances for a while. But its move into the service space follows Google’s acquisition of Postini. It wasn’t too long before Google angered partners by dropping pricing in attempt to gain market share in a market segment that already includes predatory pricing players such as Dell alongside other companies such as Symantec, Hewlett-Packard and EMC.

It’s hard to imagine how anybody can make any real money in this space given the tendency vendors have when it comes to sacrificing partner margins in the name of vendor market share. But Tangent feels pretty strongly that it can win on both sides of the equation. That means first identifying that a lot of the rival storage archival services have a low cost of service for one year’s worth of storage. But prices of $10 to $12 per user per year quickly move up to $22 per user in year two or three of a contract. In contrast, Tangent is going with a flat rate of $8.25 per user per year no matter how long the contract. At the same time, Tangent is not only promising lower pricing, but it also is promising partners margins in the range of 20 to 25 percent.

The end result is an unusual channel scenario where the lower cost offering also happens to be one that partners might actually make the most money on.

A similar scenario is also starting to play out in the security space. Large vendors in this space are squabbling with partners over who owns the customer. The issue is significant because whoever owns the customer is responsible for renewing software licenses. If the vendor does, the partner essentially loses control over the account.

Panda Security is trying to leverage a lot this consternation with a simple policy that says the partner is responsible for all software license renewals. At the same time, Panda is saying that it has a greater library of signatures available for identifying security threats, has a smaller footprint and has architecture that is much friendlier to developing a managed security service.

None of this means that either Tangent or Panda are going to automatically usurp the dominant players in their categories. But it does probably mean that a lot more partners are going to take the time to hear what Tangent and Panda are trying to say. Now some subset of the partners that these vendors talk to are going to find what both vendors have to say interesting enough to give them a chance. And when enough partners do that, you suddenly start to see a few shifts in market share points that will have little to do with end-user issues and everything to do with how the channel was first treated and then respected.

 
 
 
 
 
 
 
 
 
























 
 
 
 
 
 

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