Symantec (NASDAQ: SYMC) has been taking some heat for recent comments to Wall Street analysts – that Platinum Partners can buy direct from the company, cutting out distributors.
Actually, this isn’t a new strategy – it’s already been offering this for several years – but it has quite a few resellers up in arms. And it’s not exactly welcome news for disties, either.
Distributors aren’t being cut out altogether. The option to move away from two-tier distribution is available to Symantec’s top 700 or 800 partners. The vendor defended itself by saying that all large accounts have had the ability to buy direct in the past, and about two-thirds of its top partners are already doing so. The business model hasn’t changed, and there are still tens of thousands of accounts where the business is channel-led.
There was also anger over automating the renewal process by taking it direct. But Symantec says this will allow customers to renew with their partner or with Symantec, and the commission will go to the partner.
The hardest part now, for Symantec, will be damage control – especially after it has worked so hard to project a channel-friendly image. Enrique Salem, Symantec’s COO, told analysts that if distribution is not adding value, there’s no reason to keep them as part of the equation. He also said it didn’t make sense to continue to leverage both a distributor and a partner to serve the largest customers in the world.
And, while Salem said this could result in improved margins for its top partners, Symantec later said those improvements would be minimal, and that savings would come from an elimination of distributor rebates and sales rep commissions.
These mixed messages may lead to a feeling of mistrust among resellers (in some cases, it already has) – and it’s unlikely that Salem’s comments went over well with the vendor’s distribution partners. After all, Symantec is still working with those same distributors that he implied are not adding value.
And this announcement – although not a new strategy, but an acknowledgement of one that already exists – is also an acknowledgement that distributors will be cut out of Symantec’s largest deals. The reaction? It could be that disties focus their value-added efforts on other security vendors.
However, Symantec says there is a specific piece of business where distributors are a bottleneck: the enterprise buying programs and site licenses that are part of its Flex Buying Program. And, to be fair, many other vendors also operate this way, through a mix of direct and indirect options for top partners – particularly in tight economic times.
But, looking back, Salem may be regretting his choice of words. While he may not have intended to diss the disties, his comments didn’t exactly come across as channel-friendly – and it will take some damage control to undo the damage of those words.
