Joint Ventures: A Recipe for Failure in the Channel

Joint ventures are tricky by definition. While they tend to start off with much promise over time they almost always wither and die. The reasons for this are varied. Usually, it comes down to conflicting internal agendas. But sometimes unforeseen external forces also wind up making the joint venture untenable.

Such is the case with the sudden dissolution of Symantec-Huawei. Originally formed to combine Symantec’s storage technologies with hardware manufactured by the Huawei, a multi-billion dollar Chinese conglomerate, the goal was to leverage Huawei’s manufacturing muscle to bring products to market that were aggressively priced enough to gain market share. Symantec-Huawei then expanded to that mission to push into the networking market.

Now we have reports that Symantec-Huawei is no more. The reason for this is because Symantec became concerned that its ongoing relationship with Huawei would jeopardize its security business. Apparently the U.S. government has become concerned about sharing classified information with Symantec for fear that it would wind up in the hands of the Chinese government. If you haven’t been paying attention to security issues lately, tensions over security breaches that get traced by to attacks emanating from China are on the rise.

In this case solution providers that aligned themselves with Symantec-Huawei are finding that they have become collateral damage in a cyber-war that shows no signs of abating. The good news is that there are not that many solution providers affected. Symantec-Huawei had a compelling portfolio of appliances, but incumbents such as Cisco, EMC, Hewlett-Packard and Juniper Networks would compete aggressively on price based on the size of the deal. As most solution providers already know, competing primarily on price, no matter how good the margins are for the solution provider, generally results in tough sledding.

As an object lesson, however, the dissolution of Symantec-Huawei will probably cited for years to come as the reason to stay away from joint ventures. Despite the best of intentions, all it takes for something as common as a change in management teams or a new acquisition to make the joint venture no longer viable.

Some times one partner in the venture buys out the other, which is usually the best outcome fro channel partners. But more often than not solution providers usually get caught in the middle of these ill-fated ventures. Customers start asking some pointed questions about future support, and the solution provider winds up having to compete for the business all over again at a serious disadvantage.

Life is already difficult enough for most solution providers without adding any additional uncertainties, which whether it’s in the form of a joint venture or a simple co-marketing alliance between vendors most solution providers will generally view these efforts with suspicion. From their perspective, it’s often more practical to pull the various components of a solution together without much assistance of the vendors involved no matter how well meaning they might be.

In addition to the inherent flexibility that approach gives the solution provider, it also has the benefit of never putting the solution provider in the awkward position of having to apologize to the customer for the business actions of others. There’s plenty of opportunity to do that when it comes to the technology itself without having to do it because two vendors suddenly decided they no longer have a use for each other.