The margin is not enough: Q&A with McAfee channel chief

The biggest message Fernando Quintero, McAfee’s vice president of channel sales for the Americas, wants to tell Canadian channel partners is that the formula for success is to be better connected.
Quintero’s formula for the channel does not consist of 20 vendor partnerships with 50 different product solutions but to consolidate to just a few and to focus on leveraging the partner program for bigger margin success.
And, while McAfee remains a consistent top margin producer for solution providers it was not the be all and end all for the security vendor in the marketplace. McAfee was getting out-hustled by Kaspersky in the SMB space and out-foxed by relative newcomer Palo Alto Networks in firewall security.
Margins, while important, were not enough. So McAfee made a strategic acquisition this summer for Finnish-based StoneSoft Corp. to address the Palo Alto challenge and re-packaged and re-priced their solutions to be a better fit for channel partners.

Quintero discusses margins, the re-packaging of McAfee products and the changes to the Canadian organization. The following is an edited transcript.

CDN: Why did McAfee want to make organizational changes in Canada?

Fernando Quintero: Some of the changes that were done in Canada were made to accelerate business. Brian Gumbel (who now has Canadian responsibility) has an incredible track record of taking a territory and expanding it. Combined with Luc Villeneuve’s go-to-market skills, customers and partners will get more expertise. From my perspective, Brian gets the channel extremely well. We are going to leverage that knowledge and listen to partners to address the market challenges in Canada. We are also going to put more resources and expertise in North America to make sure we further accelerate the growth in Canada.

CDN: McAfee introduced a re-packaging and re-pricing strategy. From an Americas standpoint, what can partners do now that they could not do before?

F.Q.: The end point suites, not too long ago, had fallen behind in terms of adding value. With new components such as ePO, mobile, encryption, and risk advisor we looked at pricing to see if we were adding the most value for end point dollars spent. They are now competitively priced and we re-balanced the two new suites. Many of the deal quotes were for the old suites through deal desk. We had to make several manual adjustments and there was a lot of touch from McAfee on these orders and quotes. So we did a reset to reduce the amount of touches. The new suites are competitively priced there is value in how they integrate together. The pricing is aggressive and it enables channel partners to make profitable margins, while customers get extra value from the products they acquired.

CDN: McAfee has offered some of the best margins in the industry. With the loss of business to Kaspersky and Palo Alto Networks are solution providers treating margins differently?

F.Q.: Margins are still an incredible focus for channel partners. Both front-end and back-end margins are used for profitability. The main issue we found is that with the suites we lost some traction because we did not have the right packaging and the right price. We reset that. Palo Alto’s focus was on next generation firewall and now with StoneSoft we probably have the best next generation firewall technology out there. It’s the same message we had with incubation and leveraging routes to market for explosive growth. This was just about quotations and timing of the sales cycles on the street. The repackaging addresses that with the launch we are already seeing double digit increasing with our bookings.

CDN: Are there any differences in the way customers are consuming security solutions between Canada and the rest of the Americas regions?

F.Q.: I see it to be similar. Customers are obviously faced with budget challenges and want to move from a capex and consume security to opex in a switch-on and switch-off model. It’s more adaptable for them and it can be adjusted if it’s not working. The models are the same and the ask from channel partners are for an MSP program that focuses on the hardware and the software. They want to go to a customer and say we have a yearly license model and we also have flexible model. All the markets I’ve seen are shifting in the same direction. This wave is coming from every angle.

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Paolo Del Nibletto
Paolo Del Nibletto
Former editor of Computer Dealer News, covering Canada's IT channel community.

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