...and it doesn’t come from Oracle.

Back in January Oracle announced it was classifying the 4,000 largest Sun customers as named accounts thus managing the business directly and eliminating the partner opportunity. Many Sun VARs were stunned with this announcement seeing many of their best clients taken away from them.

Recently, Oracle informed Sun resellers that a limited number of VARs (up to twenty) would be authorized to sell hardware support renewals. As of October 15, 2010 only authorized VARs will be able to resell Sun hardware support renewals. Given that maintenance renewals are a significant revenue stream this is a major blow to the Sun reseller community. With this decision it seems that Oracle is expanding its direct sales focus and continuing to move away from VAR channel sales.
 

Sun VARs have been courted by IBM, HP and others. A move to another OEM partnership begs the question: why not take advantage of Oracle’s restrictive policies? One clear opportunity for Sun VARs is to move their client base to a support agreement that they (and not the OEM) control. Third party maintenance/support agreements represent a much better margin opportunity than an OEM agreement. Moreover, the flexibility and savings delivered to clients are easily measured. Clients would much prefer a flexible and customized agreement which includes multiple support levels (Oracle has one) and that can deliver up to 40% savings. Expanding these third party maintenance agreements to integrate non-Sun equipment provides additional revenue opportunities while giving the client a single point of contact for many products.

 

Over 60% of all hardware support agreements come up for renewal in Q4. Given this fact, third party maintenance solutions could be a Sun VAR’s greatest margin opportunity over the next several months.