Sun tosses most US customers to the resellers

Only largest accounts will get a direct line

By Austin Modine • Get more from this author

Posted in Servers, 25th July 2008 22:22 GMT

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Sun Microsystems plans to rapidly move its entire US customer base, short of its largest accounts, to an indirect sales model.

In coming months, Sun's "Partner First" initiative will transfer all who aren't amongst its approximately 300 highest spending customers in the country to one of its reseller partners.

The plan was announced internally on July 11 and sniffed out this week by IDG News Service.

Surprisingly, Sun plans to complete the transition by as soon as the end of this quarter or early next quarter. That only gives about four months for Sun to divvy out its customers amongst a pool of about 600 US channel partners.

The move is an attempt to stir up revenue by strengthening its traditionally inconsistent channel outreach. Sun's partners have been under heavy fire by rival resellers of IBM, Hewlett-Packard, and Dell gear — as well as losing sales to Sun itself.

Principal analyst at Gabriel Consulting Group, Dan Olds, suspects it's a gamble to cut costs and streamline the operation.

Although Sun said it will invest in partners and recruit new ones if needed, Olds believes the company has hard work ahead to work up a significant support architecture for the shift in strategy. It also lacks the reputation in its reseller business that competitors such as IBM, HP or Dell have, he said.

"To me, you do these kinds of hand-offs over time — maybe a year," said Olds. "Doing it so fast, it kind of makes me think the benefit is offloading the cost."

One major concern is how the move will effect customers. Because Sun will depend entirely on its partners to find and close sales, build systems, and provide much of the support and services, the change could be a blessing or a curse depending on the region.

There's also the task of divvying up its customer base among the competitive channel market.

Sun says it doesn't currently have plans to expand the initiative outside the US. But if the shift helps with Sun's pocketbook, it certainly wouldn't be surprising to see a tour of duty abroad.

The company is due to report its quarterly earnings report next Monday. Further details will likely be discussed at that time. ®

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