Relax, we’re still all about the channel. That’s the message Symantec ((Nasdaq: SYMC) is seeking to send to its partners after remarks by its COO during a conference call had many questioning the security vendor’s commitment to the indirect model.
The trouble began following a conference call with financial analysts held June 12 by Symantec’s COO Enrique Salem. When the transcript of the call was made public misconceptions about the company’s distribution and channel model quickly surfaced, including that the company may be moving to a one-tier distribution model and taking SMB license renewals direct.
With the remarks touching-off a firestorm, the vendor is now in damage-control mode. Julie Parrish, Symantec’s vice-president of global channel office, is working hard to quell the rumours she says were created by media and partner misunderstanding of Salem’s statements.
“(His) comments were misconstrued and got twisted around which is unfortunate,” said Parrish. “The media outlets didn’t talk to enough partners or come to me first to help put those comments back into context.”
For the record, Parrish says Symantec is not moving from a two-tier to one-tier distribution model for its largest customers, as was previously reported. She says customers have always been able to buy solutions directly from the vendor and, of its top 700 to 900 large named accounts, roughly two-thirds of that revenue was already going direct to Symantec. The rest of its revenue, she notes, flows through the company’s partner community.
“Symantec has not changed in any way the compensation, nor have we made any pricing discounts to influence customers to buy direct from us,” Parrish said.
Back in April, Parrish says Symantec re-evaluated its distribution strategy, deciding that for certain types of business it would make more sense to utilize a one-tier model and also a separate open-source distribution model. When an enterprise purchases a Symantec product such as Backup Exec which doesn’t require an enterprise site license, for example, she says it would make more sense to purchase through a one-tier.
For all other enterprise deals where customers want to purchase Symantec products in more of an a la carte-type fashion, along with additional services such as delivery and support, a two-tier distribution model would make more sense to fulfill the customers’ needs, she adds.
It’s been 90 days since Symantec has brought this open-source distribution strategy to market and Parrish says there’s has not been any sort of uproar from the distributors.
Greg Myers, vice-president of marketing at Tech Data Canada, says Tech Data has been working closely with Symantec Canada to understand these recent announcements and future distribution changes.
“As far as we understand, there will be more partners in Canada that will be able to procure certain eligible SKUs directly from Symantec,” he said. “It’s always disappointing as a distributor when you lose access to business. If affects our ability to be profitable. Going through a two-tier channel always has superior economic results associated with it.”
As for now, Myers says there have not been any significant changes or impacts he’s aware of regarding Symantec modifying its Canadian distribution model with Tech Data. Currently, no SKUs have been pulled from the distributor by Symantec, he added.
Fred Patterson, director of enterprise channels at Symantec Canada, said the company’s channel partners and distributors are important in helping it achieve its goals.
“At this time we have made no formal change in our channel strategy and as such expect no material change in our go-to-market strategy,” he said.
Symantec’s Parrish says the move to an open-source distribution is designed to help partners compete.
Customers have the option of purchasing products direct, Parrish says Symantec recently allowed distributors such as Tech Data and Ingram Micro to take training and receive certifications to be eligible to receive additional products from them. An open-source distribution model is what Symantec’s distribution partners were asking for, Parrish notes. No longer are the distributors limited to carrying Symantec SMB products, she says, which will open up further market opportunities.
Myers says this option was recently made to Canadian distributors with Symantec’s UNIX enterprise product suite, which will hopefully help Tech Data improve its business with Symantec and further expand its position in the security space.
“I have always been in favour of open-source distribution,” Myers said. “When you have it closed, you limit the ability for the partner to drive their business. For credit, product availability, and coverage reasons, going open-source through multiple distribution points is part of what makes the reseller market so strong.”
Other misunderstandings were around Symantec’s decision to take its SMB renewal deals direct. This is not the case, Parrish insists. Symantec will send a letter to its customers 60 days within the expiration date of the product that advises customers to renew their product. In the same letter, she said the partner who sold the product to the customer will also be stated. In 30 days time, another letter is sent to help facilitate the renewal process in which the specific partner information is again made available, but this time an option for renewing online is also included.
“We’re trying to facilitate the matching to the partner,” Parrish said. “In the SMB space, we realized our renewal rates weren’t where we wanted them to be. Thus our efforts to help drive more automation came about to show customers which partner to go to (for renewal).”
Another statement that Salem made during the call reads, “So if you’re a platinum partner, you’ll have the opportunity to buy direct from Symantec. Because if the distribution channel is not adding value there’s no reason to keep them in the part of the equation.”
While this statement came from a company that has always touted its channel-friendliness, it was no surprise that it then caused a huge uproar in the channel.
“I heard that statement and I don’t think it’s fair to characterize distributors as the bottleneck,” Myers said. “We are the ones that allow business to be done efficiently and predictably on a real-time basis. We have an awful lot to do with the delivery of that value to channel partners. And customers would much rather be engaged with distributors that carry all vendors because it makes doing business easier.”
In response to Salem’s statement, Parrish says his words were twisted around and were misunderstood by those that heard and read it.
“Keep in mind, (Salem) was in a financial analyst meeting to help analysts understand where we have efficiencies in our go-to-market model,” Parrish said. “The spirit of what he’s saying isn’t entirely wrong either. Another way of saying what he said but in different words is getting distributors to know that we need them to add more value in the low-end and mid-market business areas.”
Parrish said Symantec has always been a channel-led company and always will be. The company relies on its partners, which Parrish said are critical in helping Symantec reach into all areas of the world.
“Distributors can add a huge amount of value with the pre-order sales process,” Parrish said. “I think that’s what (Salem) was trying to say. We’re working very hard to help our partners understand what our strategy is. We require our partners in our robust partner ecosystem to help us serve these markets.”
