hp

Channel partners rally behind Nutanix Web-scale converged infrastructure

Steve Kaplan , , , , , , , , , , , , ,

“Really?!”

That was the one word email I received from Nutanix’s Sr. VP of Sales (and my boss), Sudheesh Nair, in response to the Q4 2013 Piper Jaffray Storage VAR Survey. The surveyed partners ranked Nutanix second to last in terms of sales performance relevant to plan.

Needless to say, I was frustrated. The channel perception of Nutanix was out of synch with Nutanix’s record-setting sales in 2013 as the fastest-growing infrastructure company of at least the past ten years.

But understanding and successfully positioning Nutanix has been a learning process for the channel. When Nutanix CEO, Dheeraj Pandey, first approached Lightspeed Venture Partners almost five years ago, he made it clear that his new company would disrupt the storage industry – including the venture capitalists’ existing investments. Unlike most entrants into the suddenly popular hyper-converged space, this revolutionary vision is integral to everything we do at Nutanix.

Partners can’t simply pitch a “faster, cheaper, better” storage array as they can with the other early stage companies in the survey. Partners need to be able to articulate and evangelize to their clients how Web-scale is a sea change that is fundamentally altering the infrastructure of the modern, virtualized datacenter.

The Difference a Year Makes

2014 continued the trajectory of rocketing sales and, gratifyingly, a much broader spectrum of channel partners caught the Web-scale fever as well. From small partners building their businesses around Nutanix to multi-billion dollar channel organizations moving Fortune 500 clients over to Web-scale, Nutanix is changing the channel landscape.

According to the latest Piper Jaffray report, channel partners now rank Nutanix sales performance in the #1 position – ahead of CommVault, Dell Storage, EMC, HP Storage, NetApp, Nimble, Pure Storage, Veeam and VMware.

Piper Jaffray

 

The Stern Agee Channel Survey similarly shows a huge improvement in channel recognition of Nutanix. Channel partners listed Nutanix as the second leading key company disrupting the established storage sector – right behind Pure Storage (but quickly catching up). Nutanix is ranked ahead of Nimble (and rapidly increasing the spread), and is ranked far ahead of Tintri, Violin Memory, Nimbus Data, Nexenta, Solidfire and everyone else.

sterne Agee

 

Looking Forward to 2015

It’s exciting to see Nutanix partners across the world enthusiastically embrace the Web-scale opportunity. They’re leveraging Nutanix to differentiate their companies, gain new customers, increase sales and shorten sales cycles.

I want to thank all of our partners for your continued faith and trust. The good news is that Nutanix is really just getting started. New capabilities such as one-click hypervisor upgrades, metro availability, connectivity to AWS and Microsoft Azure, among many others, mean extraordinary continued opportunity in the year ahead.

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EMC implies that SANs may not be so great for hosting virtual machines after all

Steve Kaplan , , , , , , , , , , , , ,

The inventor of the storage array, EMC, has indicated that a hardware-designed architecture is perhaps no longer the best solution for hosting a virtualized datacenter. The Register reported today that EMC will utilize ScaleIO as a VMware kernel module.

As I pointed out in the introductory post to this site less than two months ago, IDC says that $56B of annual server and storage sales go through just seven datacenter manufacturers: HP, IBM, EMC, Dell, Cisco, Oracle and NetApp. EMC’s announcement means that the majority now have a certified hyper-converged solution (not even counting EVO:Rail):

  • EMC:     ScaleIO
  • Cisco:    Maxta. Cisco also has invested in Stratoscale.
  • HP:         StoreVirtual
  • Dell:       XC Series web-scale converged appliances, powered by Nutanix software

Despite their dependency upon legacy 3-tier infrastructure for tens of billions in revenues, these datacenter giants recognize the necessity of joining the hyper-converged revolution. The threat of public cloud combined with much faster access to information is resulting in an astounding pace of its adoption.

SAN Huggers

Back in the aughts, we had to contend with the server huggers who staunchly refused to believe that their applications could run as well, let alone better, as virtual machines. But the financial and other advantages were too compelling to resist, and datacenters are now approaching an 80% virtualization rate.

Today, server huggers have been replaced by SAN huggers. These are the folks who insist that it is preferable to move flash and disk away from the compute and put them into proprietary arrays that must be accessed across the network. Never mind the issues around complexity, performance, resiliency, time-to-market and cost.

But just as virtualization provided an enormous opportunity for forward-thinking channel partners last decade, Web-scale has even more potential over the next several years. The key is introducing the concept in a way that will resonate with customers steeped in years of 3-tier infrastructure tradition.

Financial Modeling

It is natural for technologists, including channel partners, to jump into speeds and feeds and attributes and deficiencies. But I suggest taking a different tact. Help customers see a bigger picture, and consequently adopt a more strategic approach, with the aid of financial modeling.

IT leaders are realizing that to remain relevant, they need to run their internal operations with the same type of efficiency, responsiveness and accountability as the public cloud providers. This necessitates a more comprehensive process for selecting infrastructure than simply comparing up-front costs of similar solutions.

Cloud providers ruthlessly evaluate all of their on-going costs to ensure they are maximizing every square meter of datacenter space. Transitioning to ITaaS requires evaluating not only the equipment purchase price, but also expenses such as power, cooling, rack space, support, administration and associated hardware and software requirements.

One approach is to boil everything down to a lifecycle cost metric that can be easily applied to competing solutions. I describe a TCO per VM model in a recent Wikibon article. But regardless of how partners present the results, financial modeling on its own is insufficient for optimally determining an organization’s datacenter future.

Financial modeling is the hook to capture a prospect’s attention and to guarantee an audience with decision-makers. It is the key for partners to really understand their client’s pain points and objectives. They can then incorporate other vital variables such as risk, expandability, agility, reliability, resiliency, and so on within a framework that will resonate with their customers.

Going through this process positions a solutions provider to help its customers begin the datacenter migration process. It also provides the opportunity to incorporate private cloud, active/active datacenters, virtual desktops and other use cases made economically feasible by a hyper-converged infrastructure.

Disruption Made Easy

Even a compelling Web-scale evaluation can still leave a partner challenged to disrupt existing buying habits, processes and governance policies. But now that EMC has joined VMware and three of the other leading hardware manufacturers in validating hyper-converged infrastructure, it is easier for partners to initiate a conversation around datacenter strategy.

The winners in the new software-defined era will be those solutions providers who help their customers understand, select and implement the best architecture for their environments. The losers will be the VARs who continue to push legacy solutions without even bringing the Web-scale options to the table.

Cisco jumps into the hyper-converged game

Steve Kaplan , , , , , , , , ,

Cisco changed the datacenter game with UCS – the only server designed from top to bottom for virtualization. Despite widespread skepticism that the networking giant knew nothing about servers and would fail miserably, in less than five years UCS became the number one blade seller in the Americas.

In our new compressed disruptive-cycle world, Cisco itself has now fallen far behind when it comes to optimally hosting a virtualized datacenter. The company is, however, scurrying to catch up. Within the past few weeks, it’s been revealed that Cisco both invested in hyper-converged startup, Stratoscale, and also blessed Maxta as the first, and so far only, certified hyper-converged solution to run on Cisco UCS.

How UCS Thumped the Server Leaders

I’ve been a vocal fan of UCS from the beginning. In late 2009, when “over 100 companies” were using UCS, I wrote a blog post comparing UCS vs. the HP Matrix. While competitors scoffed at UCS as a “one-size-fits-all product”, I maintained that it would revolutionize datacenter virtualization.

The dominant server manufacturers of the day were perfectly happy with the status quo. But Cisco realized that virtualization would become the datacenter standard and that a new type of server was required. Cisco initially approached IBM and HP to jointly develop a product, but both companies declined. So Cisco instead funded VMware cofounder, Ed Bugnion, and a team of engineers to spend three years building UCS.

UCS helped mitigate virtualization challenges with capabilities such as FCoE (Fibre Channel over Ethernet), hypervisor bypass, extended memory, services profiles and a GUI that can help the server, storage and network teams collaborate more effectively.

But UCS’s Achilles heel is that it really only addresses a small part of the virtualized datacenter issues – the compute. By far the majority of the pain in the modern datacenter has to do with storage. Not surprisingly, four storage manufacturers, EMC/VCE, NetApp, Hitachi and Nimble, all incorporate UCS as an integral component of their so-called “converged infrastructure” solutions.

Channel partners across the globe, such as the one I worked for, understood that as customers increasingly virtualized their datacenters, they would want the enterprise capabilities and features that UCS offered. These partners worked with Cisco to make UCS the number two blade seller in the world.

Descending into Irrelevance

Ah, but all things must change – especially in a software-defined world. While Cisco was promoting the superiority of custom-designed ASICs, Nutanix was bringing the advantages of commodity-driven web-scale architecture to the enterprise. The impressive innovations that Cisco unveiled over five years ago are now not just obsolete, but superfluous.

  • Fibre Channel over Ethernet (FCoE): Unlike the converged infrastructure offerings built around UCS, FCoE is an example of true convergence of the network stack – melding fibre channel and IP Ethernet networks. But today, Web-scale eliminates the requirement for SANs and switching fabrics entirely.
  • UCS Manager GUI: Lets storage and server teams collaborate more effectively together. Not so useful when separate storage administrators are no longer necessary.
  • Custom ASICs: Cisco boasts 12% increased performance from proprietary hardware. Nice but inconsequential when Moore’s Law doubles performance every 18 months anyway. Nutanix utilizes commodity hardware, but increases performance nonetheless with regular software updates that improve hardware effectiveness.
  • Services profiles and templates: These were great in the day for relatively fast provisioning of ESX hosts. Nutanix Foundation is much faster and doesn’t require zone masking or manual hypervisor installs.
  • Integrating the Cisco Nexus switch: Making the network the management center was key to Cisco gaining traction with its network administrator constituency. But Web-scale eliminates the requirement for complex, intelligent and expensive converged network switches.

The leading converged infrastructure manufacturer, VCE, proudly advertises that it only takes 45 days to order and put a Vblock into production – 5 X faster than with conventional servers and storage. In contrast, Nutanix can be ordered, received, installed and in production in around five days.

VCE ad

Upgrading VMware vSphere requires a corresponding upgrade to the entire Vblock – a process that can easily require a team of consultants several days to accomplish. And even then there are risks involved. A former Vblock customer that recently migrated to Nutanix was still running three versions back of vSphere because they didn’t want to have to deal with the associated Vblock upgrade.

Contrast all of this time, expense and risk with doing a vSphere (or Hyper-V or KVM) upgrade on Nutanix. The process is literally just a single click. No cost, no downtime and no risk.

Lesson for Nutanix

UCS and Nutanix both target the same customers – virtualized enterprise environments. I’ve heard from multiple partners that despite our relatively tiny size, Cisco has declared Nutanix to be its number one competitor. Not HP. Not VMware. Nutanix. Cisco’s announcements around Maxta and Stratoscale reflect its determination to, albeit belatedly, get into the game.

Cisco is one of the most successful and well-run companies of all time. While known for its innovations in areas such as routing, switching, VoIP and collaboration – perhaps nothing has been as impressive as Cisco’s accomplishment in the datacenter. Cisco upended all of the existing dominant server players by developing UCS to fulfill the computing requirements of the virtualized datacenter.

The lesson here for Nutanix is that if Cisco can fall into complacency, anyone can. We’ve got to keep our heads down, be humble, stay hungry and keep innovating – even if we have to eventually disrupt our own technologies.

Lesson for Channel Partners

Cisco, VMware, Nutanix, Dell and HP, in addition to the other EVO:Rail partners and lots of startups, validate that hyper-converged infrastructure/web-scale is the future of the virtualized datacenter. There’s a $50 billion + annual server and storage market out there just begging to be disrupted by those channel partners with both the vision and the desire to execute.

Thanks to @vmmike130, @langonej, @evolvingneurons and to @richardarsenian for input.

When a channel partner looks in the mirror, does a trusted advisor look back?

Steve Kaplan , , , , , , , , , , , , ,

In my former position as VP of Cloud and Virtualization at Presidio, I frequently used financial modeling to assist our reps, but did not drive sales on my own. That changed after I learned about Nutanix.

I loved the no-SAN concept and was curious to see how it would actually play in Peoria. I pitched a savvy CIO who had participated in an EDUCAUSE panel I moderated, and she was immediately intrigued. But the Chicago office of Presidio was reluctant to work with a new manufacturer. I just made the sale myself and convinced another region with which I had stronger ties to process the paperwork.

The experience should have tipped me off as to the type of situation I would face in my dual channel and strategic sales role at Nutanix. While it’s been surprisingly easy to sell web-scale converged infrastructure to former clients who have called me or vice-e-versa (always running the deals through partners of course), it’s often difficult to get buy-in from VARs – especially from large ones.

mfg rep 1

The Channel Partner Perspective

I had dinner a few days ago with the VP of Sales of a sizable regional VAR. He asked me how much business our top partner would do with us this year. I told him that one organization had a plan in place to sell $50M in our new fiscal year, though internally we pared it down to be conservative. The VP told me that his company will do $90M this year with EMC alone.

As enamored as he and his team were with our technology, I could tell he was thinking about how he could realistically present it internally. Even matching the sales of Nutanix’s largest partner wouldn’t come anywhere near the business he’s driving with EMC and Cisco. How could he convince his executive team that they should risk the wrath of their two largest vendors by promoting Nutanix?

And, suppose he did manage to persuade the executive team to go all in with web-scale; they still would have to get their sales reps on-board. The reps have established relationships with legacy manufacturers, are trained and experienced in selling their products and depend upon them for opportunities. These “coin-operated” reps do not readily gravitate toward promoting new technologies.

mfg rep 2

The Customer Perspective

If I were a CIO, I would not want a solutions provider who simply brought me different product configurations from a leading datacenter manufacturer – I could find that information myself on the Web. I’d want to work with a partner who was diligent enough to constantly investigate new promising technologies, and who was astute enough to discern which ones could have a positive impact on my organization. I’d expect the partner to bring those options and his recommendations to me for review.

VARs that close-mindedly mimic their vendor perspectives risk becoming, in the eyes of customers, glorified manufacturer reps. An EMC partner, for example, might feel confident today in leveraging a trusted relationship with a CIO to advocate Vblock as the best option for a VDI deployment. But the probability is increasing that the CIO will learn on her own that she could have implemented a similar project at a fraction of the cost and with none of the risk by utilizing web-scale. She will consequently feel her partner is either uninformed or, worse, acting in EMC’s rather than in her best interest.

mfg rep 3

Preserving the Customer Relationship

Channel partners tell me that large enterprises move very slowly – the implication being that they have plenty of time to continue making lots of money by promoting legacy 3-tier infrastructure. Perhaps they’re correct, but it’s a dangerous way to conduct business.

Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.”  Just because a customer asks for more storage doesn’t mean a solutions provider should limit the conversation to arrays. They can take the opportunity to educate their client about how Google and the leading cloud providers have moved away from using SANs and ancient (1987) RAID technology. They can discuss the advantages of web-scale converged infrastructure and about whether or not the architecture might be appropriate for the customer’s environment.

Even if the customer decides, for whatever reason, to go with traditional 3-tier infrastructure, at least the channel partner looked out for the customer’s best interest. Over time, as web-scale/hyper-converged infrastructure becomes the virtualized datacenter standard, the customer will appreciate the effort and integrity of the partner for introducing it.

The Playing Field has Already Changed

I don’t agree with the premise that big enterprises will continue to move slowly. External pressures from public cloud and internal pressures from much more rapidly changing technologies will force enterprises to change more quickly as well.

Just look at web-scale. Almost overnight it has jumped solidly into the mainstream. VMware’s endorsement of hyper-converged infrastructure as the platform of choice for hosting virtual machines leaves no doubt as to the future direction of virtualized datacenter architecture.

Then there’s Dell – one of the “big seven” who collectively drive 76% ($56B) of the annual server and storage business. Dell also blessed hyper-converged architecture last week with its launch of the Dell XC Series: Web-scale Converged Appliances. Yet another of the “big seven”, EMC, has said it will develop its own EVO:Rail offering. Even HP is weighing in both with an EVO:Rail solution and with its own StoreVirtual product. Cisco is showing signs of making the leap as well.This massive validation during the past few months by the leading datacenter players enables solution providers to bring up web-scale without concern of appearing “bleeding edge”. It also means that they should, with at least some degree of impunity, be able to focus on hyper-converged solutions by creating a separate division explicitly for this purpose.

However they do it, I strongly encourage channel partners to figure out a way to get engaged with web-scale. Nutanix continues, and is even accelerating, our trajectory as the fastest-growing infrastructure company of the past decade. This provides an extraordinary opportunity for forward-thinking partners to grow along with us.

Dell XC Series Launches – and Nutanix partners benefit

Steve Kaplan , , , , , , , , , , , , , ,

Nutanix partners will benefit from the rising tide of web-scale mindshare as Dell launches its XC Series: Web-scale Converged Appliances across the world. But solutions providers currently selling Nutanix-branded appliances through Dell are already discovering other advantages. Choice Solutions, for example, beat out an entrenched Vblock incumbent with the assistance of Dell’s existing server business and its financing capabilities.

Disruption with Dell

Nutanix’s Sr. VP of Sales, Sudheesh Nair, likes to talk about the compressing disruption cycle in our industry. Disruption used to take place over a roughly ten year period, but now it occurs on a to a two to four year cycle.

Large companies tend to be very, very good at running marathons.  They spot emerging patterns and then maintain their leadership through acquisition or internal development. Only rarely have exceptional companies such as NetApp and VMware been able to emerge through the disruptive cycles as large leaders themselves.

The datacenter infrastructure landscape is long overdue for disruption. According to IDC, just four manufacturers – EMC, NetApp, IBM and HP, command a 65% market share of storage today. EMC, with a 30% share alone, has been particularly adept at acquiring innovative companies such as Data Domain* and Isilon. IBM and HP acquired XIV and 3Par respectively.

Dell’s acquisitions of Compellent and EqualLogic have enabled it to attain a 7% share of the storage market. In contrast, Dell has a 17% share of the server business which is also dominated by a handful of manufacturers:  HP, IBM, Dell, Oracle and Cisco own a 77% market share between them.

This discrepancy between server and storage market share creates a huge incentive for Dell to leverage its server base to more deeply penetrate the enterprise storage market. While Dell knew that EVO:Rail was coming, it also recognized that EVO would be a 1.0 product lacking the necessary enterprise attributes for wide scale adoption. Enter Nutanix.

Nutanix Web-Scale

Nutanix pioneered the hyper-converged infrastructure era just three years ago, but legacy datacenter players have already been scrambling to claim a stake. After EMC’s mid-2013 acquisition of ScaleIO went nowhere, the company now is counting on subsidiary VMware’s EVO:Rail. HP has resurrected its Left Hand Networks product as StoreVirtual with EVO:Rail positioned as a back-up in situations where it can’t sell its own product. Even the leading all-flash array start-up, Pure Storage, has announced it will be coming out with a hyper-converged offering.

Dell, however, took a different tact. It took a look at all the potential hyper-converged products, including one that already utilized its hardware, and quickly realized that Nutanix’s innovative vision, enterprise capabilities and exceptional support could enable it to make the same type of inroads into enterprise storage that it already holds with servers.

Dell’s recognition of the huge opportunity Nutanix presented led to an OEM agreement signing that is reportedly the fastest that the company has ever done. The OEM agreement includes unique terms that ensure Dell will not have a price advantage over other partners selling Nutanix-branded appliances. And Dell is subject to the same stringent rules as all of Nutanix partners in terms of forecasting and registering opportunities.

Synergies with Nutanix Channel Partners

Dell partners cannot sell Nutanix without first meeting the requirements of, and enrolling in, the Nutanix Partner Network. And Nutanix-only partners cannot sell the Dell XC Series. But partners of both companies can sell either product depending upon customer technical, environmental and purchasing requirements.

Dell brings a great deal to the table. Customers have a lot of trust in the Dell brand, and Dell already has a pervasive footprint in datacenters across the globe. Its extensive purchasing agreements and contracts with both governmental and commercial entities make procurement much easier. And Dell Financial Services can significantly shorten sales cycles.

It’s already been established that once Nutanix gets a foot in the door for a particular use case, customers quickly come to love the simplicity and elegance of the solution. As a result, Nutanix becomes an almost annuity-like business for partners as customers, now unencumbered by the cost and difficulty of scaling arrays, expand their environments.

But beyond increased revenues and shortened sales cycles, partners of both Nutanix and Dell also benefit from the tendency of web-scale to expand to more specialized use cases such as VDI, private and hybrid cloud, big data, disaster recovery and remote branch infrastructure. Partners consequently have an opportunity to increase their services business, and to provide more specialized services at higher rates.

Datacenter Infrastructure Under Seige

Between web-scale and public cloud, the $73 billion annual server and storage business is under siege for the first time. As Choice Solutions and other Nutanix partners are already learning, working together with Dell enables them to grow their businesses by grabbing a piece of the massive low-hanging status quo fruit.

“Choice Solutions has already had a great experience with the Dell team even before the XC Series has shipped. We have seen first-hand that the partnership will amplify Nutanix’s footprint in the Data Center. Being Part of the Nutanix Channel Advisory Council, I have seen the commitment from Nutanix to protect the interest of the channel, and know that Nutanix has been diligent about the joint opportunity registration program. We already had our first Nutanix/Dell marketing event in Dallas, and the Dell team was both enthusiastic and successful in helping drive attendance to the event. Similar events in other cities are already planned.”    

                Jim Steinlage, President and CEO, Choice Solutions

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*The Data Domain acquisition did not go uncontested. NetApp still has a press release on its Web site proclaiming its acquisition of the same company.

Channel Disrupt – an Introduction

Steve Kaplan , , , , , , , , , ,

“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.”
-Charles Darwin

I’ve headed up channel sales for the Americas at Nutanix for 19 months now, but previously worked on the partner side of the IT infrastructure channel for 25 years. During that time, I saw a lot of disruptive technologies such as Ethernet, VoIP, the Internet, etc. But from a datacenter standpoint, nothing came close to the impact of virtualization.

VMware’s introduction of vMotion 11 years ago turned out to be an incredible boon to the IT channel. Solutions providers grew in both number and size as they helped organizations across the globe to virtualize their data centers through the acquisition of high-end hosting servers, SANs and switch fabrics.

Many VARs, especially the larger ones, were reluctant to fully embrace VMware’s revolutionary technology. But they were fortunate in that virtualization spread surprisingly slowly; they generally had time to adapt. The VMware consultancy I ran, for example, was purchased after only three years in business by a much larger publicly-traded Cisco partner desperate to quickly acquire virtualization expertise.

Today’s disruptive climate is dramatically different. Rather than enjoying an exploding increase in purchases of traditional datacenter hardware, solutions providers are going to see the opposite take place. And the timeframe is going to be very fast.

Consider:

  • Web-scale technology, as introduced to the enterprise by Nutanix three years ago, has gained exceptionally fast mind share across the globe including an OEM offering by Dell.
  • VMware has introduced its own hyper-scale technology, EVO:Rail, that competes with both its long-term storage partners and with parent company, EMC.
  • HP is jumping on the hyper-converged bandwagon both with EVO:Rail and with an updated version of its Left-Hand Networks. And it’s splitting off half of its business in order to focus on the enterprise space.
  • EMC, the leading storage manufacturer, has been seeking to be acquired.
  • VCE, the leading player in the so-called “converged infrastructure” space has increasing animosity among two of its primary partners, and Cisco is rumored to have turned off the financial spigot.
  • AWS is making big strides as they work to take away everyone’s hardware business.

According to IDC, the total server and storage market is now over $70B annually. An incredible $56B of this business is done by only seven vendors (eight once Lenovo’s purchase of IBM’s server business is reflected): EMC, HP, IBM, Dell, NetApp, Oracle and Cisco. Most of this revenue flows through channel partners.  As the status quo business decreases, resellers are going to have to react very quickly to compensate.

Manufacturer 2014 Server Revenue
(in millions – annualized)		 2014 Storage Revenue
(in millions – annualized)		 Total
(in millions)
HP $12,776 $2,384 $15,160
IBM $11,888 $2,848 $14,736
Dell $8,332 $1,700 $10,032
EMC –
$7,056
 $7,056
NetApp –
$3,060
 $3,060
Oracle
$2,948
 – $2,948
Cisco
$2,908
 – $2,908
Subtotal $38,852 $17,048 $55,900
Hitachi
–
 $1,492 $1,492
ODM Direct $3,340
–
 $3,340
Others $8,084 $4,940 $13,024
Total $50,276 $23,480 $73,756

Putting the Customer Second

All solutions providers say that they have their customers’ best interests at heart. But infrastructure VARs are typically dependent upon a few, or less, of the handful of leading datacenter manufacturers for most of their business.

The VARs make significant investments in trainings for both salespeople and technical folks. They work to obtain both individual and organizational certifications. They attend manufacturer conferences, engage in manufacturer led demand-generation events, and develop close relationships with their manufacturer partners. In return, the resellers receive Marketing Development Funds, access to sales and engineering resources and, most importantly, opportunities.

This channel structure has worked quite well since the early days of IBM-initiated solutions integrators, and many reseller organizations are now doing hundreds of millions or even billions of dollars in annual revenues. But the channel structure can often make it challenging to put customer advocacy ahead of manufacturer loyalty.

When a manufacturer, for example, introduces a partner into a new account, that partner has to push the manufacturer’s products regardless of whether or not the technology is the best fit. Introducing a competitive product would spell the death knell for receiving future opportunities.

Partners of the leading datacenter incumbents need to be careful even in their existing accounts of mentioning one of the newer disruptive technologies as an option. The partner will typically position it, if at all, only in situations where the incumbent either lacks a competitive product or is not likely to notice. The alternative is to risk the potential wrath of the datacenter giant.

So while a channel partner will privately often concede that, say, web-scale infrastructure makes a lot more sense for a virtualized datacenter than a Vblock, it can’t even bring up this option to the customer for fear of jeopardizing its large Cisco and EMC revenue streams. The manufacturer  relationships supersede the customer’s best interest.

In Boldness There’s Opportunity

Ray Noorda of Novell used to tell his partners, “In mystery, there’s margin”.  Today’s corollary might be, “In boldness, there’s opportunity”. The handful of infrastructure giants are selling virtualized organizations tens of billions of dollars worth of equipment that was designed and optimized for a physical datacenter.

Enterprising channel partners have an extraordinary opportunity to educate clients and prospects about the advantages of web-scale converged infrastructure. Not only is the revenue and profit potential vast, but they can also differentiate themselves from the pack as innovative, forward-thinking, and as leaders in integrating cloud technologies.

Sources
Weak Demand for Storage Systems…as Worldwide External Disk Storage Systems Revenue Falls for Second Consecutive Quarter.  09/05/2014. IDC Press Release.
Server Refresh Cycle Propels Industry Forward in Q2. 08/27/2014. Charlie Osborne. ZDNET.