Dell Global Channel Chief Greg Davis has made channel program fairness and transparency a cornerstone of the Dell channel effort.

That channel program "fairness and transparency" came through loud and clear in a Davis post in response to my blog post, "Is Dell Dealing From A Stacked Deal Registration Deck?"

First off, Davis gets down to the real Dell Deal Registration numbers. Dell partners have received over $2.8 billion in opportunities on an astronomical 22,771 deals that have gone through Dell's deal registration program, he says.

What's more, Davis says the number of Dell partners using deal registration is on the rise. He says 37 percent more partners used deal registration in the first quarter this year versus the fourth quarter last year.

Davis also emphasizes that fairness and transparency are paramount in the deal registration program. "When a partner enters a deal into our system, a neutral analyst team reviews the deal to make sure it is complete and meets the criteria for our program," he  says."The deal is then checked to ensure the deal revenue will be incremental (i.e. not registered by another partner or Dell’s direct teams), and if it is, the deal is approved. Dell Direct does not approve or deny deals."

Davis also emphasizes that it is factually incorrect to state that the 30 percent of deals that Dell chooses not to accept are simply deals that Dell Direct is taking. In fact, he says that 25.5 percent of deals are rejected because they do not meet criteria like deal registration minimum or because the deal lacks enough detail to be registered.

In the last three weeks, Davis says 29 percent of the deal registration rejects "were due to not meeting the deal registration criteria, 48 percent were due to other partner registrations, and only 23 percent were due to the deal being worked by our direct teams before the partner registered it."

Davis, to his credit, is making sure dealers get the real numbers so they know that Dell is serious about building a broad and deep channel. And he is not shy about delivering the numbers or the channel program transparency to prove that you can teach an old direct sales dog new tricks.

Best Buy made its name by selling technology products at the lowest possible price.Of course the best prices don't always mean the best service. In fact, there is no free lunch in life. You usually get what you pay for.

To that point, Best Buy has always had trouble providing technology services to consumers, businesses or any class of customers.

Now that technology product sales have plummeted, though, the company is making a big push on services. In fact, Best Buy's new CEO Brian Dunn sees services as the future for the company.

In the most recent quarter, Best Buy's comparable domestic store sales were down 4.9 percent due to what the retailer called a decline in customer traffic. Interestingly enough, the sales decline was partially offset by what Best Buy called gains in notebook computers, mobile phones and repair services.

So are Best Buy's Geek Squad techs being pressured into making repairs that are flat out just not necessary? It's a question worth asking given the experience of one of our senior editors Scott Campbell and a number of other consumers complaining about the Geek Squad.

To get the full impact of Best Buy's services shortcoming check out this blog post by Campbell. For those that don't want to digest the full Campbell saga let me summarize: Campbell's wife earlier this year bought him a Dell laptop and purchased the Best Buy three year "Black Tie Protection" warranty. How much margin, by the way, does Best Buy make on this Black Tie Protection warranty plan? My bet is it's a lot more margin than they are making on the Dell laptop.

The Black Tie black eye for Campbell came after only a few months when the hinge on his Dell laptop came loose. How many of these low priced Dell laptops are coming unhinged?  My bet is there are a lot more Dell laptops being repaired than HP laptops.

Campbell brings his Dell laptop back to Best Buy which agrees to ship it out and return it to him in three weeks. How in the world can you justify a  warranty that does not provide a one or two day turnaround in this day and age? Three weeks. Are you kidding me?  What exactly are you paying for if you can't get a repair done in 48 hours?

We've already proven that Best Buy's Black Tie warranty isn't exactly a barn burner. Then Best Buy's Geek Squad replaces the hard drive without so much as even a heads up to Mr. Campbell. Then Mr. Campbell gets a phone call from another Geek Squad rocket scientist asking if he wants to buy data recovery services from Best Buy?

Do you see a pattern here? Does this sound like an advertisement for a local computer store, system builder, reseller or solution provider? You bet it does. There is no way that any local solution provider could provide this kind of service and last more than a month.

Mr. Dunn and Best Buy really need to do some soul searching and implement some best practices from its warranty services offerings to its Geek Squad policies regarding making repairs that have not been approved by a customer.  From this vantage point it looks like there is a lot more bad business than best buys going on at Best Buy.

Best Buy, of course, won't answer any questions from Mr. Campbell. My question for local resellers and solution providers out there is: Are you seeing MORE customers knocking on your door in the wake of a bad Best Buy experience? And for technology consumers: What kind of BEST BUY experience have you had with the retailer's  warranty offerings and its Geek Squad service?

There has been a lot of talk recently about how far Dell has come in terms of its channel efforts.

But there are still a lot of partners who are just flat out frustrated dealing with a company that is tilted toward favoring its direct sales organization over its partners.

One of the areas where Dell needs to do a much better job is with is its deal registration program. Dell Global Channel Chief Greg Davis earlier this year boasted about Dell's track record of approving more than 70 percent of the deals registered for partners. That leaves about 30 percent going to Dell Direct. Can you name any channel-savvy vendor that would be proud of a 70 percent success rate on a deal registration program? Remember, most deal registration programs are all about partners competing against one another. The Dell deal registration program is all about partners competing AGAINST Dell Direct.

One sales executive for a VAR 500 solution provider scoffs at claims that Dell has changed its direct sales stripes.  He calls Dell's deal registration a "black box" that gives Dell Direct the ability to call the shots. "You put your registration in and you are in a holding pattern until Dell determines whether it is something that is being worked by their Direct Team," says the sales executive. "The Dell Direct Team has discretion over whether they want to give you the deal or not? You tell me: is that channel-friendly? I don't think so. If the Dell Direct Team can decide under their own discretion if they want every single deal, how is that channel-neutral or channel anything?"

Dell Direct, by the way, has more than once tried to call out services engagements -- separate from product sales -- that it simply didn't have the ability to handle, only to have the customer hand the services part of the deal squarely to the solution provider and give the straight-out product business to Dell Direct.

What is your experience with Dell's deal registration? Do you view Dell as a channel ally or a direct sales conflict-ridden foe?

The decision by Inacom Information Systems owners Laurie Benson, Gary Hoffman and founding investor Loren Mortenson to cash out and sell the business to Core BTS deserves to be looked at closely given the sorry state of solution provider valuations.

The purchase price for the 26-year-old Inacom business was not disclosed. But let's look at what we do know about Inacom and Core BTS, and the financing that made the deal possible.

Inacom, a Midwestern solution provider stalwart headquartered in Madison, Wisc., clocked in as an $80 million business on the 2008 VARBusiness 500, but was not listed on the 2009 VARBusiness 500. It has 170 employees and has VMWare Premier, EMC Velocity Premier, Cisco Gold and Microsoft Gold partnerships.

Core BTS, headquartered in Falls Church, Va., clocks in at $100 million in sales in the 2009 VARBusiness 500. It has some 180 employees and has Hewlett-Packard Platinum, Cisco Gold, Cisco IronPort and Microsoft Gold partnerships.

So out of the gate it looks like the companies are somewhat comparable. And we do know that Inacom President Frank Albi was brought into the company six years ago to take Inacom to the next level and build an exit strategy for the founders.

Hindsight is 20-20, but let's face it: The founders would have made a helluva lot more money if this deal was done six years ago. Selling a solution provider business right now is like trying to sell a home in a real estate market that has been obliterated by the mortgage meltdown.

So just how did this deal get done in the current economic environment? Simply because the financing came from the largest shareholder in Core BTS, Founders Equity Inc.

Founders Equity, in fact, provided the equity financing and arranged for what it called "the debt financing necessary to enable" the transaction. The big questions that remain unanswered:

* How much cash did the founders take out of the deal? (Not much in cash is my bet).

*How much debt did Core BTS take on? (More than you'd think).

*What are the exact debt terms and conditions (Good for Founders Equity, bad for Core BTS).

One top executive at a large integrator, who did not want to be identified, says there are many solution provider owners who are tired and want to get out of the business. "They missed the last window," he said. "Now they are finding there isn't an exit, or the exit isn't as attractive as they dreamed it would be. The stark reality is hitting home and they are saying: 'Do I slog on or do I bite the bullet and do the deal?'"

In this case, Benson, Hoffman and Mortenson no doubt decided to bite the bullet. They had enough pain.

Any debt on the balance sheet of a solution provider business is no longer shrugged off like it once was when the market was booming. "Debt on the balance sheet is not a good thing right now," said the executive. "Companies with a lot of debt on their balance sheet are really going to be stressed. Companies with little debt on their balance sheet are going to do well."

So just how stressed are you going to be if you are an Inacom employee moving to Core BTS? My bet is life is going to get a lot more stressful in the trenches for the former Inacom sales and technical team. It's fitting that the Inacom name has been done away with. It's a different company going forward.

If you want to know just what kind of hot water you can get your company in with a faulty channel strategy, then check out the fallout that Sage is experiencing courtesy of the sudden death of its largest partner, MIS Group of Dallas.

First Microsoft and now NetSuite are jumping into the fray to recruit Sage partners and customers. Sage has gotten a channel black eye like you read about and is trying to fight back. It promises to communicate directly with its channel partners early next week. That said, if ever there was a time for the company to go on an all out campaign to all of its constituents (shareholders, customers, partners, press, analysts) it is now.

MIS Group was Sage’s partner of the year for two years running. When your partner of the year closes up shop in the dark of night and leaves town with nothing more than a post on its web site saying that the company has ceased all business operations, it’s not a sign of a solid channel.

If you really want to experience what a channel and public relations mess that MIS Group has gotten itself into with this partner of the year stuff check out this photograph from Sage’s annual Insights partner conference in mid-May.It shows Sage Business Solutions Division President Jodi Uecker-Rust, MIS Group CEO Robert Muir, MIS Group President Greg Boyd and Sage North America Customer Chief Officer Doug Meyer all smiles on what you would have thought would be a celebratory evening. But were they really celebrating in Nashville that evening? Didn’t any of the Sage and MIS Group executives that were playing out the awards scene on stage have a view into what would transpire a mere two months later? Were any of these executives on the stage shocked when MIS Group closed down? Didn’t Sage executives have any idea they had bet too heavily on a partner that was going down? Shouldn’t they have known? What does it say about the company’s channel strategy? All questions that deserve to be answered given what Sage is going through now.

Microsoft made its play earlier this week to Sage customers and partners “concerned with the stability of the Sage Software channel.” Now NetSuite is getting into the act. What’s different about NetSuite is, it’s a pure Software-as-a-Service (SaaS) pitch. Just to make sure their pitch doesn’t fall on deaf ears, NetSuite is offering a 50 percent revenue share. You read it right:  a whopping 50 percent revenue share. That is an amazing offer. NetSuite has even set up a website to wrangle in those Sage channel partners that screams: “Now’s The Time To Move Your Business To The Cloud. Join The NetSuite Solution Provider Program.”

The ERP market may be hurting. But not the on-demand software market. Gartner forecasts the SaaS market will grow at a compound annual growth rate of 19.4 percent through 2013. NetSuite sales were up 41 percent last year and 22 percent in the first quarter. Sage sales in North America were down 9 percent for the half year ended March 31. What Sage calls organic subscription revenues declined three percent in the first half, while organic software and software-related services revenue declined 22 percent.

The NetSuite offer is the real deal. It’s a whopping 50 percent margin to get into the growing  SaaS market. Sage should be worried. Are Sage Business Solutions Division President Jodi Uecker-Rust and Sage North America Chief Customer Officer Doug Meyer smiling now? Probably not.

Given the financial rumblings that Nortel and Sage partners are facing right now, it would be wise for solution providers of all kinds, but particularly those closely tied to a single vendor, to do a financial health checkup on their vendor partners.

Unless you've been living under a rock, you know that Nortel has been in a financial free fall for years and finally filed for Chapter 11 bankruptcy protection in January after years of missteps. Earlier this week, Avaya made a bid to scoop up Nortel's enterprise solutions business for $475 million, as Nortel seeks to sell off all of its divisions to pull out of bankruptcy. More on that later.

At the same time, Sage witnessed its largest solution provider partner, MIS Group of Dallas, close up shop suddenly on July 6 without even filing for Chapter 11 bankruptcy protection.

It is no small matter that Microsoft, in a press release aimed at recruiting Sage customers and channel partners, has decided to invite those "concerned with the stability of the Sage Software channel to consider available alternatives from Microsoft."

You can call the Microsoft play grandstanding if you'd like. But in the global economic environment we are living in, the financial health of a vendor and its partners is a serious issue and clearly VERY HIGH on the purchasing criteria checklist for midmarket CEOs and CIOs.  

A financial health checkup performed by solution providers on their vendor partners would be a wise move given the global economic crisis. Distributors and vendors are surely doing financial health checkups on their solution provider partners and are closely watching accounts receivables.

It's going to be interesting to see just how big a hit Sage took on the accounts receivable line when MIS Group went out of business. Sometimes vendors think a partner is so big it can't fail. And sometimes partners think a vendor is so big it can't fail. In the case of MIS Group and Nortel, that thinking proved faulty.

What's more, given that we are in the midst of a major economic reset, there are likely to be more big trees and small trees that fall in the forest. The sad thing is the big trees take down a lot more people and businesses.

Nortel's failure is rippling through the solution provider community as we speak. Believe me, there are many Nortel only partners that are living right now off support and product sales from existing customers. You can bet that those cases of a company that has never before bought Nortel equipment making a Nortel buy are few and far between. If the Avaya lifeline goes through, it is still going to be a long, hard road for those Nortel partners to transition to Avaya. On the other hand, if you were a Nortel partner and also an Avaya partner, you're sitting pretty, or at least you're more comfortable knowing you and your customers have a built-in insurance policy.

And no matter what anyone says, the failure of MIS Group is going to make life in the sales trenches difficult for Sage partners of all stripes. Customers are clearly going to look more closely at solution providers' balance sheets -- either Sage partners or any other vendor's channel partners.

Let me ask you this: If you were a midmarket CIO making a $1 million ERP buy, would you feel more comfortable right now making a Sage MAS 90 or MAS 200 purchase or a Microsoft Dynamics ERP buy?

Sage Group ranks No. 3 on AMR Research's recent list of global enterprise application vendors, coming in at $2.40 billion, well ahead of Microsoft, which comes in at $1.30 billion. But remember, Microsoft, which dwarfs Sage, weighs in at number 25 on the Fortune 1000 list at $60.42 billion.

Microsoft has a lot of cash it can use to make sure it moves ERP solutions to the next generation including Software-as-a-Service (SaaS). Microsoft may not always be first, but it always gets there (look at Bing).

Partner balance sheets are going to come under increasing scrutiny in the wake of the MIS Group collapse. Solution providers should make sure they scrutinize their vendor balance sheets just as closely. It’s a matter of trust for you and your customers.

Noticably absent from the blizzard of hype at Microsoft's  worldwide partner conference this week is precisely how much the software giant will spend in sales support helping partners close deals.

One sign of a big cut in that total sales support  is Microsoft’s decision to eliminate telephone sales support for thousands of its partners. The changes come after Microsoft laid off an undisclosed number of Telephone Partner Account Managers (TPAMs) who provided sales assistance aimed at helping partners close deals and navigate the Microsoft bureaucracy. Partners say that TPAMs had a direct effect on their total sales and profits.

It's probably not a coincidence that Microsoft left what may be the most important session regarding just what kind of sales assistance partners can expect for the last day of the conference. That’s an 11 a.m. CT session at the Ernest N. Morial Convention Center in Rooms 275 and 276, hosted by Chris Weber, vice president of Microsoft's U.S. enterprise partner group, and Phil Sorgen, vice president of Microsoft's U.S. small and midsize business partner group. It’s all about how an overhaul of Microsoft’s partner program will affect the SALES SUPPORT partners get from Microsoft.

PLEASE anyone out there attending those sessions let the community know what the real channel story is in terms of sales support that you will get direct from Microsoft.

My questions for partners out there – those few U.S. partners that attended the Microsoft extravaganza (remember there are only 2,000 US partners at the show) and those that did not:

Are you getting more, less or no change in Microsoft sales support this year?

Are your Microsoft sales up, down or no change this year?

Are your Microsoft profits up, down or no change this year?

That’s the question that everyone is asking this morning given Intel CEO Paul Otellini’s proclamation that the PC market has “bottomed out” and the “worst is behind us.”

Otellini spoke at length during Tuesday's Intel earnings call about a deep reduction of Intel's inventory levels -- totaling $900 million -- for the first half of the year, saying that signs now point to the replenishing of that inventory throughout the company's distribution channel and big name PC maker supply chain.

But remember refreshing inventory in the channel especially with top PC makers like Hewlett Packard doesn’t mean there has been a marked change in consumer or business sentiment. No one in the channel in my world is talking about any such change among consumers or businesses.

It looks to me like Otellini and Intel are getting ahead of themselves. One thing Otellini didn’t talk about is the huge excess supply of PCs in the market from the millions of layoffs that have hit corporate America like a neutron bomb. Those PCs are sitting in closets and will more likely than not be pulled out once these businesses start hiring employees again.

One indicator that solution providers and VARs would be wise to consider is the The OnForce Services Marketplace Index (OSMI), a bellweather for on demand services.

Peter Cannone, the president of OnForce, certainly sees no PC rebound on the horizon. And Cannone has a rich and vibrant community of more than 13,000 service technicians who are hands on with customers in the field. Look at this index as kind of the pulse of the information technology marketplace.

Cannone predicts that IT product sales will continue to decline in the second half of the year and VARs that do not move quickly to provide a full panoply of services will suffer.  There certainly appears to be more business fixing PCs than selling them.For the fourth quarter in a row, PC Desktop services ranked highest in the OSMI index.

Cannone points to a huge excess supply of IT equipment in businesses as a result of a blizzard of layoffs in corporate America that is going to continue to provide a hang-over for PC product sales oriented solution providers. “We have shed somewhere close to 2 million jobs in the US in the second quarter,” he said. “That’s 2 million PCs available in the pipeline. It’s going to take at least a year to clear that pipeline. We went through this same kind of bubble in 2000 and it took nine to 12 months to clear it out.”

My bet is solution providers are more likely to see a big upside in building an asset recovery business aimed at helping customers unload excess product than by concentrating on selling new PCs.

By now the entire free world knows that Microsoft will finally offer a free version of its wildly popular Office productivity suite – including Word and Excel – to compete against the rapidly proliferating Google Docs office productivity suite.

The software giant used its annual Worldwide Partner Conference in New Orleans to reveal that its new Office Web applications will be available through Windows Live in a move that Microsoft proudly proclaims will give "more than 400 million consumers"  access to Office Web applications at "no cost.”

Be careful on how you apply that “no-cost” definition. The question is: Does “no cost” mean FREE? Not in my reading of the Microsoft tea leaves. Remember, Microsoft CEO Steve Ballmer has talked in the past about the company getting users to give up personal information that it can sell to advertisers to make its no-cost model work. My bet is there is going to have to be a serious exchange of some kind of Internet currency – as in, 'Will you switch lock, stock and barrel to Bing, eliminate Google as your search toolbar preference and get rid of all remnants of Google Docs?'

One clear sign that the Microsoft no-cost Office Web applications are not fully baked is the fact that the software giant has no information on how the thousands of Microsoft partners will play in this new Office Web  world. Ironic, given that the big Microsoft announcement came at the partner conference. Check out this article from ChannelWeb Senior Editor Richard Whiting that gives the Microsoft partner spin. Takeshi Numoto, corporate vice president of Microsoft Office, said Microsoft hasn't yet worked out just what role the channel will play in selling Office Web.

Numoto said Microsoft intends to deliver Office Web to consumers through its Office Live service, which today includes both ad-funded and subscription-based software. Another clear sign that Microsoft is hedging its bets: Office Web is a follow on to its Office 2010 product - clearly Microsoft priority one. Office 2010 has already entered its technical preview stage and will be available in the  first half of next year. 

Microsoft said that all customers with Office 2010 volume licenses, including more than 90 million Office annuity customers, would have the right to run Office Web on their premises as well. So, just think, all corporate customers funding Microsoft’s sales and earnings juggernaut will get to use Office Web on their premises at no cost. What’s more, Microsoft said that Office Web will be available via “Microsoft Online Services, where customers will be able to purchase a subscription as part of a hosted offering.” Microsoft intends to eventually provide a Software Plus Services component to all its applications. That’s part of what Microsoft calls its Software Plus Services strategy rather than Google’s Software as a Service (SaaS). As far as I can figure out, Software Plus Services means you pay for the software and then get the services.

Don’t get too heated about all these "no-cost" issues since Office Web will not be available sometime until the second half of 2010. That should just about be the same time that Google unleashes its Chrome operating system for netbooks – a direct hit against Microsoft’s operating system franchise.

Microsoft’s Office Web applications are a long way from competing with Google Docs and other online office competitors such as Zoho, which are eating away at Microsoft Office like a cancer.

The fact that Microsoft, once again, has failed to rally its thousands of partners to take up arms against the true pure online SaaS office productivity suites is not a good sign for Microsoft. Indeed, it shows that Google and the like have the upper hand here.

What Microsoft needs is a clear Office Web strategy – and it doesn’t need to be FREE – and you can bet it won’t be. What it needs is to engage its thousands of partners to stop Google Docs, Zoho and all the other online office  producitivy suite competitors.

The biggest question hanging over the sudden shutdown this week of Sage’s largest partner, MIS Group of Dallas, is: Who is the mysterious senior secured lender that is taking control of the company’s assets?

It’s an important question given that the company’s death has left what is a significant portion of Sage’s software sales up for grabs, being picked over by competitors who are using Twitter and paid Google search links to try to pick up clients.

If a bank owns those assets, then their failure to step up and make a deal to get some value out of what is by some accounts a $30 million business bears looking into.  Why wouldn’t the bank have put together a deal to at least recoup some of its monies?

It makes sense that Sage was owed a significant amount of monies. Why didn’t Sage work hand in hand with the bank and other creditors to ensure a smooth transition for customers?

Right now, the customer base of Sage Software’s No. 1 reseller in 2007 and 2008 in sales volume is being picked clean by competitors and ex-MIS Group employees looking to start up their own businesses.

What the hell is going on behind the scenes with this so-called senior secured lender? It begs the question so many solution providers have been asking: Why didn’t MIS Group file for a Chapter 11 bankruptcy organization?

If the company was shut down by the senior secured lender without any regard for the assets, then you’ve got to ask yourself: Did the senior secured lender feel that the assets were for all practical purposes effectively worthless? What does this say about the solution provider business and the value of those businesses?

Right now the value of a $30 million business is evaporating right before every creditors' eyes. That means those creditors are left holding the bag while the company’s top executives walk away--free to go out and start a technology consulting business or staffing firm that could go in and grab some of those old accounts. How could this have happened? What does it say about our bankruptcy laws?

Google’s new Chrome operating system for netbooks is still a year away. But there is little doubt that it is already keeping Microsoft Chairman Bill Gates and CEO Steve Ballmer up at night.

Gates and Ballmer built a $60 billion business that was ignited by a deal to provide IBM with an operating system for the IBM PC based on a per-unit license rather than a onetime fee. The deal for an OS that Gates bought from a company called Seattle Computer Products also included an agreement that let Gates and Microsoft license the OS to PC makers other than IBM.

This, of couse, goes down as Gates’ greatest moment. It represented a financial windfall that was the seed of all of Microsoft’s PC power and profits.

What’s ironic about this new chapter in the soap opera that is the highly lucrative technology business is that Google CEO Eric Schmidt, formerly of Novell, is taking a page out of the Gates playbook to hammer his old nemesis.

Gates and Ballmer, by the way, left Schmidt’s old company bloodied and beaten in the network wars. Remember, Novell was the leader in the network operating system market. And Gates and Ballmer used their business and technology savvy to leave Novell as an afterthought in the network OS world.

Now, Schmidt and Google are using the same tactic that allowed Microsoft to make a comeback in the browser wars in the early days of the Internet—offering Internet Explorer for FREE. That’s right, free is a great strategy when you have cash to burn and the product is not your primary cash cow. Free killed Netscape.

A free operating system is just what Google is planning to bring to netbook makers with its Chrome OS.  Google has, in fact, said it will offer the system free under an open-source license.

For Microsoft, whose operating systems business is already smarting from a PC market meltdown, this represents a financial migraine the likes of which  it has never before experienced.

The Wall Street Journal reported earlier this year that Microsoft makes just $15 per netbook with Windows XP Home, compared to between $50 and $60 for PCs running Windows Vista. Take the netbook phenomenon, which is transforming the market and putting a huge dent in the desktop PC market, and then add up the operating system financial hit Microsoft is likely to take.

Believe me, Gates and Ballmer are swapping e-mails right now on how they are going to take the shine off Chrome with a public-relations blitz. And watch, Microsoft will spend more money battling Chrome before it ever gets off the starting line than it will getting the channel locked and loaded with Windows Azure, its forthcoming cloud computing platform.

The sad thing about the operating system firefight between Google and Microsoft is that both these companies will spend mountains of money wining and dining the top netbook makers but will do little to influence solution providers and system builders. Those partners who are able to private-label netbooks and then support customers using them for business and play are the wild card in the operating system wars. Sadly, they are often looked at as a pawn rather than a strategic piece on the chessboard, even though they represent the majority of the PC market.

Google and Microsoft will likely fight the war without giving much thought to the channel. That may be the biggest and most foolhardy mistake they will make as they battle for netbook OS supremacy.

Is this what the channel has come to? Is a Cisco Catalyst 6500 Supervisor 720 virtual switching supervisor engine with 10 Gigabit Ethernet uplinks really a commodity product? If ever there was a case for over-distribution and the laws of supply and demand taking full effect and taking down a high margin product then it is the case of Cisco products being sold on Amazon.com.

That’s right on Amazon.com. The same place you buy that latest and greatest James Bond DVD or Dan Brown novel you can buy a Cisco Catalyst 6500 Supervisor 720 (“Buy New”) from Amazon seller The Factory Depot for $28,344.33 or what The Factory Depot calls a 25 percent discount of $9,660.67 off the list price of $38,005.00. Or how about a “New” Cisco Catalyst 4948 switch  from TekGalaxy "shipping to a galaxy near you" for  $9,383.31 + $19.45 shipping or $10,272.29 from 7Gifts + $24.45 shipping?

My question for Cisco solution providers - and I do mean SOLUTION PROVIDERS - that have invested heavily in Cisco mandated technical certifications is: how do you feel about your customers being able to go on to Amazon.com and buy these complex products in this kind of public bazaar?

One Cisco partner says the lower than low Amazon listings are a cancer that’s going to eventually backfire on vendors with VARs refusing to do the solutions heavy lifting required to install, support and service these complex products. This Cisco partner believes the Ciscos of the world will eventually either have to do that heavy solutions lifting themselves or find a way for solution providers that have invested heavily in technical certifications to get the margin that is necessary to make sure they can keep customers up and running.

Is there something wrong in a channel world where Cisco switches are available on Amazon.com? What’s the real channel story? And what does Cisco itself have to say about this?

Oracle has fashioned itself as somewhat of an acquisition whiz making deals for great technology products (PeopleSoft, J.D. Edwards, Hyperion) and then squeezing more value of out of them. That’s certainly what it looks like the company is doing once again with its blockbuster acquisition of Sun.

Why in good heaven then did the company decide to abruptly terminate channel sales relationships with the acquisition of  red-hot virtualization server management software maker Virtual Iron Software Inc.?

As we have reported on ChannelWeb this week, solution providers have received termination letters from Oracle and a couple of key sales and channel executives have left Virtual Iron. It looks like Oracle is canceling all reseller agreements and then planning to invite select Virtual Iron resellers to apply for Oracle partner status. Then why not come out and clearly lay out a road map for partners on what they need to do make the grade with Oracle?

As is often the case in the convoluted world that is the channel communicating with partners and clearly laying out what is expected from partners in the wake of an acquisition is an afterthought. A letter from Oracle CEO Larry Ellison to partners thanking them for their hard work and welcoming them to the Oracle fold would seem to me more in order given the great products Virtual Iron is bringing to Oracle. Would Oracle treat its own salespeople this way? Well maybe given the rough and tumble Oracle sales culture.

In any case, how in the world does it make sense to cut off a significant potential channel revenue source, taking a sales army that was locked and loaded selling server virtualization and then giving them what amounts to their walking papers? It reminds me of an old move studio exec who when questioned about continuing the popular Rocky film series by an art addled critic replied: “I see no reason to cut off that revenue stream.” Why cut off the Virtual Iron channel revenue stream?

To add insult to injury, Oracle had the audacity to post a partner letter on Virtual Iron web site from Oracle Channel Chief and Group Vice President Worldwide Alliances and Channel Judson Althoff boasting that the deal will benefit Oracle partners. “Resellers and distributors are expected to gain expanded opportunities to provide solutions,” wrote Althoff. “We anticipate that technology partners will gain broader opportunities for development integrations and system integrators will have the opportunity to extend services around Oracle's solutions. Partners can take advantage of Oracle’s worldwide resources and enablement through the Oracle PartnerNetwork program.”

The first rule of an acquisition is: do no harm. In this case, Oracle has done irrepairable harm. It not only has cut off a potential  channel revenue stream, it has lost key channel talent. No small matter in a world where channel IQ is in short supply.

There is one happy ending to this sad channel tale. Virtual Iron’s two top channel executives have left Virtual Iron for Akorri, a Littleton, Mass.-based developer of software for optimizing performance and utilization in dynamic data centers.

Bill Simpson, the former vice president of global channel sales and strategy at Virtual Iron, has taken the role of vice president of worldwide sales at Akorri. And Warren Mead, the former Virtual Iron national sales director, has become vice president of U.S. channels at Akorri. That’s good new for Akorri and its channel partners. Sounds to me like a great opportunity for VARs looking for an innovative solution in a channel friendly package.