Sun Sees $7 Billion Channel Opportunity

Profitable growth. Those two words sum up Sun Microsystems’ goals for the next two years. The company — which recently began its fiscal year 2008 — is striving to more than double its Americas channel sales to $7 billion by 2010, according to Tom Wagner, VP for partner sales, Americas at Sun.

During a chat at Avnet’s New Frontiers conference in Colorado Springs today, Wagner described how Sun has transformed itself in recent years and is now, once again, focused on growth. Throughout the conference, which attracted roughly 250 Sun partners, there was a sense of quiet confidence and renewed energy around Sun’s systems, software, storage and services businesses.

Although The VAR Guy has been bearish on Sun in recent years, there’s no denying the company’s progress. Sun has delivered solid profits over the past three quarters, and has walked a delicate balancing act that reinforces Sun’s commitment to Solaris even as the company seeks to open up the operating system to more developers.

Wagner considered his words carefully as he described Sun’s intended march from roughly $3 billion in annual channel sales to $7 billion in channel sales by 2010 in the Americas. Will Sun double down on its existing partners — or will the company recruit more partners to lift channel revenues? The answer will likely depend on the information that flows into Sun’s ERP system. The Siebel-based system will provide a window into partners’ anticipated channel sales, as well as partners’ maximum revenue capabilities.

“We’re going to clearly communicate with our partners to determine the [amount of work] they think they can sign up for,” says Wagner. “And the Siebel system is our single pipeline of record to determine how we’re performing against our goals.”

Looking ahead, Wagner says he has three key messages for partners. “First, I want them to know that they can grow profitable with Sun,” says Wagner. “Second, let’s be clear: Our partners are our customers. They are the ones who are submitting the purchase orders so they truly are our customers. Third, I want them to know they can count on us to behave consistently in the channel.”

The channel, Wagner insists, is in Sun’s DNA. He notes that 65 percent of Sun’s revenue flows through the channel globally. Also, Sun now includes channel partners in its major sales conferences. During a Sun sales conference earlier this month in Las Vegas, roughly 300 partners participated in company discussions and meetings, notes Cheryl Marfia, director, US partner programs, Sun.

Concludes Wagner, “Our margins are solid and we’re all really jazzed about our [fiscal 2007] results. But the market is saying “where’s the growth?” And rightfully so.”

With that question in mind, Sun is launching new programs to seed the market for its solutions. The new Partner Growth Fund, for instance, allows solutions providers to purchase Sun demo equipment at greatly reduced prices (or even for free) based on the amount of Sun solutions they sell to customers.