Channel Chief
“The IP market is a red ocean”
 Charlie Foo, Regional Director, Partner Business Group, Asia-Pacific and Japan, Brocade, spoke to Varun Aggarwal about the company’s India plans, partner strategy and the intensifying competition in the unified computing space
The Foundry business hasn’t done as per Brocade’s expectations. What are you doing to grow the IP Ethernet business from Foundry?
We actually did really well year-on-year as an organization. The company is still very profitable and the SAN business is leading the charge. We expected the Ethernet business to do better, and that is why we are putting some initiatives in place to boost that business. Moreover, since we are still profitable, we are able to invest more and put some ammunition into the Ethernet business to create more velocity in it.
With the acquisition of Foundry, we got into the Ethernet space. The IP market is a red ocean with blood everywhere. We’re parachuting in this ocean, not knowing where we’re going to land. But what we will do is play in the verticals we are strong in. These include education, media, entertainment, healthcare, service providers and government. Our entire channel and go-to-market strategy would be wrapped around these verticals. Instead of appointing a generalist partner, we’re looking at choosing 2-3 partners in each vertical, who are strong in those respective verticals, and start the partnership development process with them.
Could you tell us something about your plans for the SMB market?
If you look at the IP market, there are three concentric circles. The first one is the strategic accounts, the large global accounts. We’re present there, but it does not represent the majority of our business. The second circle is the mid-market, which comprises enterprises and represents 80-90 percent of our business. For the IP business, we play in this space. The third circle is the SMB market. Traditionally, we haven’t been strong there. Even though we had the products, we did not have the right price-points. SMBs account for only 5 percent of our business, but represent a huge opportunity for us. We are about to announce a national distributor to tap this opportunity.
With this distributor in place, we’ll reach tier-2 and tier-3 cities through the distribution channel. That is where the opportunities are, where the headroom for growth is, and where partners are not too entrenched with our competitors. Their profile is unique. And as we position our products, prices and strategies in those areas, we should be able to create a strong stream for our run rate business. I feel the run rate products give us an opportunity to reach out to areas where we weren’t as strong in the past—the SMB business.
What’s the value proposition you bring to the table for your new Select Partners?
We have account reps who work with these SIs very closely. We collaborate with our partners very early in the sales cycle. That’s why we need to identify the right partners in the right verticals. Recently, we also announced the verticalization of our deal registration program, which means that if partners register a deal that falls in our selected vertical list they’ll get 25-40 percent additional margins over and above the existing margins. This is a big benefit for the VARs. The exact margins would depend on the geographies and verticals.
We currently have about 10 partners under our Select Partner program. Our goal is to add about 5-6 new partners by the end of this year. We want to grow with partners who are very impactful in their vertical.
We have different product sets for different verticals because the requirements would be different in each vertical. For example, if you consider the high performance computing or service provider market, they are not looking at setting up a campus area network, but the healthcare and education sector are. Thus, the product set and requirements of different verticals are completely different. We have products that are specifically designed for a particular market segment.
What are your plans to create demand in the market?
We are taking the ownership of creating demand in certain verticals through a series of strategic workshops that we’ll run in those verticals. We’re organizing three to five such workshops in each metropolitan city, targeted at different verticals every quarter.
Each workshop will have 10-12 customers, and have subject-matter experts to talk about technologies specific to each vertical. Of course, we’ll have the vertical partner present as well. This represents our alignment to our vertical strategy. With these workshops people would know us not just as a SAN player, but also as a serious IP player with an end-to-end solutions.
Players such as Cisco and HP are putting a lot of thrust on the converged networking space. What are you doing to tap this market?
While HP has announced the acquisition of 3Com, they continue to be a strong partner for us in the SAN space. They are one of the top two partners for us globally. Even their IP products do not compete with ours. The overlap between our products is very minimal.
If you look at it, it’s just Cisco and us from an end-to-end product portfolio perspective. We’ll continue our product development focus to ensure that continuity is there from the technology development perspective, and to tap the opportunity that lies in the converged network market. We already have products that are ready for the converged network. However, we do not think that the market is ready for converged networking at the moment. As far as the IP range is concerned, we have the 40G and 100G ready—but the market is not there.
Right now just two companies in the market can offer converged networks—Cisco and Brocade. We will look at multiple partnerships for the converged networking space. It is not just IBM that we’re looking at. For example, the converged network could also be a platform that we could be selling to HP, Dell, EMC or Sun.
You recently announced a partnership with McAfee to offer security solutions. What’s your strategy?
Security is a pillar of our networking strategy. New infrastructures are coming out with mandatory security requirements. By partnering with market leaders like McAfee in the security space, we can provide solutions to compete much better for incremental enterprise infrastructure. Our long-term objective is to have tightly integrated security and networking solutions to deliver incremental value and increase Brocade’s stickiness. We are also an open platform and can connect any third-party solution to our products.
What is your outlook for the SAN and IP market?
We’re very happy with our SAN business but we still think there’s a lot of headroom for us to expand. We’ll continue to work with our OEM partners—Dell, HP, EMC, IBM—for our SAN business.
The IP space is an area with a lot of potential and where we have a lot of expectations. We expect to do better than we are doing right now, and grow at a pace that’s faster than what we’ve been growing so far. We are also looking at leveraging our SAN footprint to expand our IP business. Brocade is a very partner-centric organization, and we respect our partners as collaborators. |