Storage solutions providers call Q2 sales stagnant

By Nicole Lewis, Senior News Writer 27 Jul 2007 | SearchStorageChannel.com

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The storage systems market stagnated during the first two quarters of this year, according to a new IDC survey of value-added resellers (VARs) and other storage solutions providers.

In the most recent version of the quarterly survey, 54% of solutions providers polled said their business had remained flat for the second quarter, compared to the same period a year before. Only 40% said the same thing during a survey covering the first calendar quarter of 2007.

The survey of 575 channel partners, which was released this week, is not a market-share indicator, according to a statement accompanying the report. It is designed to monitor the

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experience of solutions providers in the storage systems market, and how satisfied they are with the vendors that are their partners.

The statement also said that vendors were excluded from the results if fewer than 10 of their channel partners responded.

One of the big winners turned out to be Sun Microsystems Inc., 53% of whose partners saw an increase in business during the quarter, compared to just 37% during the previous survey. The percentage reporting a drop in business decreased from 22% to 17%.

Sun's StorageTek arm doubled its numbers – partners reporting an increase in business outnumbered those reporting a decrease two to one, compared to an even split in the first quarter.

For Sun, however, the first and second calendar quarter are traditionally stronger than the second half of the year.

Sun's positive results come on top of a rocky spring. The company caused a rift with its channel partners with a 25th-anniversary sale during which it offered customers a steep discount for gear bought directly from Sun through a special Web site. Partners rebelled, forcing Sun to reverse the direct-sale policy and include partners as part of the deal.

Not only have Sun's channel partners gotten over that faux pas, they've also resolved conflicts that arose following Sun's acquisition of StorageTek, which shook up the storage systems market two years ago, according to IDC analyst Christina Richmond.

"I've been seeing vacillation with Sun after the StorageTek acquisition; the partners have been moving around; kind of going through a shuffling," Richmond said. "I think it's great that Sun is having great responses this quarter."

Part of the reason is probably the positive results, according to Mike Willard, principal partner at Dallas, Texas-based Soccour Solutions, a Sun partner, whose storage revenue grew 12% between the first and second quarters of this year, largely due to its SunStorageTek business.

"We've increased our SunStorageTek business by around 20% from the first to the second calendar quarter of this year," Willard said. "I think the dust has settled on that merger and it looks to be a fairly profitable decision especially for Sun's channel partners," Willard added.

Network Appliance Inc. also scored well on the survey, with 45% of channel partners reporting increases in revenue and none reporting a drop.

"Our business was probably up 50% from the first to the second calendar quarter of this year," according to Sandy Cohn, general manager of Albany, N.Y based ATEC Group.

Hitachi also saw good results with 38% of partners reporting increased business and 12% reporting decreased business.

In a storage systems market that is constantly changing, Sun, NetApp and Hitachi were the only vendors to have no partners reporting a decline in business of more than 20%.

Stability was not good news for Dell Inc. channel partners, however, 83% percent of whom reported no change in their business quarter over quarter.

One reason is that Dell tends to treat the storage systems market as a business to conduct direct sales, even with channel partners who sell servers to the same customers, according to Mike Strain, director of storage at Overland Park, Kan.- based Dell and EMC Corp. partner Alexander Open Systems.

"We could sell [Dell's] storage products but we would not choose to because we'd rather sell EMC storage products than Dell's. If it's Dell manufactured gear typically we see that Dell sells their product direct," Strain said.

Let us know what you think about this story; email: Nicole Lewis, Senior News Writer

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