Watch Those Merger SignsBy Pedro Pereira | Posted 2008-02-27 Email Print
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As the Postini purchase by Google demonstrates, solution providers should anticipate negative changes from mergers and acquisitions.
The recent flap over Google’s dramatic price drops on the products it absorbed with its purchase of e-mail security vendor Postini last year offer insight into the after effects of mergers and acquisitions.
As channel partners reselling Postini products have discovered, mergers among vendors often produce deleterious effects. In this case, Google dropped price points on Postini e-mail security products by as much as 90 percent.
Technology that the channel sold previously for between $30 and $100 per user yearly now costs only $3 per user. For the end user, of course, this is a great move.
But not so much for channel partners. For them, a reduction of this magnitude puts them out of the Postini business. And it wasn’t the first time Google kicked Postini channel partners in the teeth.
Previously, the vendor had taken some channel business direct, according to partners. Postini used to let partners support customers with 1,000 or fewer mailboxes, but then cut the number to 800, and eventually, to 500.
Whether Postini would have taken any of these actions had it not been acquired by Google is merely a guess, but the reality is that these moves have taken place under Google, a company that has over the years demonstrated it either doesn’t care about the channel or simply doesn’t understand it.
Google now is looking for a channel manager, having posted an ad at Talentzoo.com on Feb. 19 for an "enterprise director of channel sales." Good luck to whomever gets the job, since one of the person’s first tasks is likely to be handling the complaints of disgruntled partners.
The Google/Postini situation should prove instructive to solution providers, in that channel partners of any company that is being acquired must prepare themselves for the eventuality that the acquiring entity will change channel programs. And those changes may not be necessarily for the better.
It’s always a good idea to know who are the competitors of your vendor partners so you can switch your business to them should an acquisition take place. I am not suggesting channel partners immediately drop a vendor that is acquired by one with questionable channel credentials.
But there are prudent ways to anticipate a situation such as the Postini developments. Managed services provider Do IT Smarter, for instance, entered a partnership with managed services vendor Level Platforms last year after Dell acquired SilverBack, which was Do IT Smarter’s only managed services vendor partner then.
The MSP would likely have signed with a second vendor, anyway, but either way, the company demonstrated that it wasn’t going to rely on a sole vendor for such an important piece of the business.
Solution providers tend to gravitate to one primary vendor brand, and some even do so exclusively. This makes managing the business easier but, especially in the case of exclusivity, it poses some serious risks.
Postini partners will be fine because they have plenty of alternatives, and some already are forging new vendor relationships. Going forward, they are unlikely to allow themselves to depend too much on any single vendor. And that is a practice all solution providers should embrace.
Pedro Pereira is editor of eWEEK Strategic Partner and a contributing editor for The Channel Insider. He is at email@example.com.