SGI becoming more of a generic IT provider

Silicon Graphics Inc. is furthering its channel strategy, announced 18 months ago in Canada, by aggressively expanding its global channel distribution.

For the first time in its history, the company known for its workstations for high performance applications in science and the film industry

will be looking to add IT resellers focused on geographies to its reseller network.

Claude Morel, channel director for SGI Canada, said SGI products based on the Linux platform can easily be used for non-high performance storage and workstation applications that do not need the expertise of a reseller in the life sciences or movie industries.

According to Morel, SGI, with its Linux-based product line and its storage product line, has a broader product mix than in the past.

“Before, with Irix and Unix, we were a research centre and visualization centre, but now we are more generic and a provider of more generic hardware and software. SGI has changed and we are in a much better position to embrace more of the market,” Morel said.

“We will have a new concept of ‘geo reseller’ and it is based on geography. For example, in Montreal there will be a reseller who will be responsible for the province of Quebec and have exclusivity of the territory,” Morel said.

SGI Canada will not have two geo resellers in the same region; however the company will still have partners such as independent software vendors or industry specific partners in media/broadcast and life sciences.

“We do not see a lot of competition in those markets. The geo reseller looks at it from an IT standpoint, while the focus reseller would be in life sciences. So they could be in the same account, but not compete,” Morel said.

SGI’s direct sales now make up 70 per cent of its entire business, but Morel confirmed to CDN that the company is working to reverse this within the next two years.

All direct reps as of July 1 or next fiscal quarter are becoming channel reps. “They will all resell through the channel and their main responsibility will be to work with channel and manage the operation in their geography,” he said.

Morel added that SGI does not expect its direct business to drop, but that the market will grow.

IDC pegs the high performance server market to grow at an estimated 10.8 per cent compound annual growth rate. It will be in the mid-range of the high performance area where the segment will spike, said Earl Joseph, vice-president of high performance technical systems at IDC. During 2004 this area grew more than 47 per cent and is expected to do well again this year, according to a research report.

In response to the market growth, SGI launched SGI Channel Connection program.

This program will place all types of SGI channel partners consolidated under a single global umbrella, guided by one global strategy.

SGI developed a global program to support the channel and reorganized the SGI field organization to support a limited number of named accounts. Non-named accounts are identified as channel-only business. The program also include a Channel Connection Academy for training, sales and marketing tools, including Market Development Funds (MDF), Service Advantage for helping partners drive their own services business, without competition from SGI, and Opportunity Registration, which enables a clear engagement model with no channel conflict or competition.

The company may be headed towards the mainstream, but its margins are not. Morel said resellers should expect margins to continue to be between 23 and 35 per cent.

Currently, SGI is active in five markets federal and defence, education, life sciences, research, and media/broadcast. With the geo resellers, Morel wants to enter manufacturing, financial, and wholesale/retail markets.

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Jim Love, Chief Content Officer, IT World Canada

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