Three separate solutions providers reached out to The VAR Guy this week, expressing concerns about alleged SonicWALL staff cuts and price changes. Instead of sounding the alarm and pressing the panic button, let’s give SonicWALL equal time to offer some perspectives and clarifications, especially amid the recession. Here’s the scoop.
First, the alleged changes at SonicWALL. A trusted friend and fellow food connoisseur told The VAR Guy to chew on this a bit:
- Within its channel team, SonicWALL allegedly has decided to reduce their layers of sales management, resulting in at least one or more channel positions being eliminated.
- SonicWALL has also allegedly raised prices — including promo prices — on various NSA products.
Another tipster told The VAR Guy: “Have you ever heard of a vendor raising prices (even promo pricing) in a down economy? Apparently, SonicWALL thinks this will work. Time to look at competitors to them.”
Keeping It In Perspective
Hmmm. Before you jump to conclusions, let’s see what SonicWALL has to say. According to an email from SonicWALL spokeswoman Colleen Nichols:
“Yes, a small number of employee were affected this week. SonicWALL like many companies continue to keep cost inline with revenues.
Regarding the price increase question, we did not raise the price on our base hardware price for the NSA’s. We did however raise the 1 year CGSS (Comprehension Gateway Subscription Service) price. We did not raise the CGSS pricing for the 2 or 3 year agreements increasing the value of the multi year contracts for our customers.”
Profits Amid Recession
Truth be told, The VAR Guy is not a pricing expert on SonicWALL solutions — so it’s difficult for him to truly interpret some of the alleged pricing changes. Plus, it hard to beat up SonicWALL or any other vendor at this moment about alleged channel layoffs. We’re in a recession, folks. Even Cisco Systems has had some targeted employee cuts this year.
And let’s not forget: Although SonicWALL’s Q1 profits were a bit short of Wall Street’s expectations, the company in April said it expects to deliver another profit for Q2. Plenty of SonicWALL rivals are swimming in red ink at the moment.
Still, SonicWALL pricing strategies seem to have rubbed at least three VARs the wrong way this week. And in the world of journalism, three has always equaled a trend.
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I only wish SonicWALL would have made channel sales cuts earlier. The writing has been on the wall for a while now. Companies like Cisco, Dell, and Microsoft made cuts last year in preparation for a bumpy 2009. Some expense forethought may have solved their profit problem and may have kept them from having to increase their pricing.
Doug: The VAR Guy hesitates to say whether SonicWALL should have made cuts sooner. Our resident blogger will simply say that he’s heard from a few VARs who are concerned about pricing strategies at the company.
But as you accurately point out, all the vendors are dealing with the economy in their own ways. After the next round of earnings releases from SonicWALL and rivals, let’s see where things stand…
No matter what they do, their products are really sinking due to low margins, high noise.
Staff reductions are just an eye wash which primarily points to pale days ahead for them.
PointCheked: Comments are welcome on The VAR Guy. But if you’re going to take shots at a vendor, our resident blogger requests that you at least disclose your company affiliation.
Do you compete with SonicWALL? Are you a former employee? Are you a VAR? Surely, readers would like to know if you’re unbiased or if you carry a grudge against the company… Thanks again for the comment: But please, disclose how you’re familiar with SonicWALL.
Some updated SonicWALL coverage over on ChannelWeb. Wonder where they picked up the news tip?
I spent many years as a Silver Partner in Sonciwall’s Channel (joined the program in 1999). I worked very hard to try to move to the Gold level to be able to get the extra 5% in order to effectively compete with e-tailors. After having them repeatedly dangle the gold carrot only to yank it away at the last minute I stopped evangelizing for Sonicwall. My wholesale purchases dropped from $120K in 2007 to approx $25K in the last 12 months. I have since been punished with a drop to Bronze level. I now seldom buy within the channel. My cost for a simple 2YR CGSS license ($357.00 list) from Ingram is now $10.00 higher than if I purchase it online out of the channel (Provantage).
So my channel status will continue to decline. I’m ordering 10 of the aforementioned CGSS licenses this week out of channel and pocketing the extra $100.00 rather than paying that channel partner subscription fee. I like to give as much of my Sonicwall business to Securematics as I can (they have wonderful customer service), but I am not willing to leave a $100 bill on the table very often.
Joe Coolest: Thanks for your personal perspectives. Always good to hear from those who have first-hand experience.
The VAR Guy wants to caution readers: One VAR’s experience certainly doesn’t represent the overall quality of a channel program.
However, TheVARguy.com remains open to reader comments who want to weigh in. Informed opinions always welcome.