Dave Gwyn, SVP Worldwide Channels, Nutanix led a group briefing at Next 2024 to highlight the upcoming announcements and developments at the conference relating to their channel infrastructure.
Can you discuss Nutanix’s recent channel developments and what we can expect in the coming year?
There have been two major inflection points in the last year within the Nutanix channel. One is the acquisition of VMWare by Broadcom, and the other is the evolution of generative AI, as artificial intelligence is on everybody’s plate now. On that first point, what we’re hearing from our partners is that they have concerns about their customers to whom they sold VMWare licenses. These customers are, in fact, resellers of that license and are concerned about where things might go as a result of the acquisition. The partners themselves have concerns about their own businesses as a 700-million-dollar margin has been sucked out of the market by what Broadcom is doing. Resellers, distributors and service providers now have fewer options on the table.
People were signed into long VMWare contracts before the Broadcom acquisition, and this isn’t something that can be capitalised or changed in the short term. Do you have to be mindful of that going forward?
When you talk about VMWare or Nutanix, both vendors position their products as platforms. By definition, if you yank out a platform everything on top of it collapses. You need to consider if everything here will work on the new platform. This will lead to a certain length of cloud migration, regardless of when you decide to do it. There are also hardware considerations as they are changing a fundamental piece of hardware. They must closely examine the hardware it is running on and look at depreciation schedules and software license EPA lengths. We believe that time is on our side and we will ride this out to see the natural sales cycle take its course. We are introducing programs, products and promotions that will enable customers to test things and not make it a binary do-or-don’t process when deciding between us or VMWare. Previously, we announced a new promotion called Launchpad which is targeted at new customers in the small and medium-sized business market. It features a heavily discounted set of product combinations which are eligible for all of our rebates. We have another ongoing promotion called Surge which nicely complements Launchpad. With Surge we have 16,000 identified accounts that are heavily affected by the VMWare situation. We’re hard at work with our partners to see which of these 16,000 accounts are within their area of operations and which of them have done work with them previously. We want to work with those partners to bring these potential customers to Nutanix. Our final ongoing promotion is called the Migration promotion and focuses on slightly larger businesses. With this promotion, if you buy two years’ worth of Nutanix subscription you get a third one for free. Nutanix is funding services where we pay the partner to deliver the migration as it positions them better than if we did it for them. In this scenario the partner delivers the margin of the services engagement in addition to the rebates and product margin on selling the licenses. It also provides the customer with exposure to better build a rapport.
What are partners looking for from clients and does it relate back to artificial intelligence?
The second biggest topic for us, besides VMWare/ Broadcom, is the concerns and potential for artificial intelligence. Throughout the industry one question is being asked, what are we doing to leverage AI? Organisations want to use it to inform their business or to help create better business processes. This is why we introduced our GPT in a box solution as AI is evolving very fast and we want to represent a good platform for AI. The assisted scaling properties aligns very well with the kinds of services that we provide. AI helps to run hybrid multi-cloud storage on the edge, on premises or on the public cloud. Nutanix aims to help answer our partners’ AI needs by helping them deploy Large Language Models directly via GPT in a box.
What are your future plans for the channel?
We have a newly created segment for Nutanix called Channel-Led. In implementing this plan, we pulled all of our salespeople out of this segment in order to avoid smothering our partners with the unnecessary complications that arise with too many boots on the ground. The other downside with an influx of salespeople is that it doesn’t scale very well. The point of a good channel is to have a force multiplier where our teams can be doing one thing whilst their team does something else. We pride ourselves in striving to deliver an autonomous channel. There are currently 80,000 accounts in this lucrative Channel-Led segment, which are also subject to a 6% rebate on any deal done within them to better recognise the partners’ commitment. To help support these partners, we created an organisation called CLARC (Channel-Led Autonomous Resource Centre). This global organisation is tailor made to assist and enable partners in challenging sales cycle elements. We strive not only to help our partners, but also to teach them.
Where do you see yourselves going forward with your partners?
A lot of focus has been placed on increasing profitability for our partners with front-end margins. We’ve increased price advances for deal registered partners allowing them to make significantly more on their margins. Secondly, we increased the rebates which includes the aforementioned Channel-Led/Surge rebates in addition to new logo and out-performance rebates. These rebates are extremely healthy and within the last twelve months we’ve paid out more than in any other time in our history to our partners. As we’re a subscription company, renewals are very important to us as they represent the lifetime value of a customer. We’ve put effort into making renewals profitable for our customers, meaning we give a price advantage to the incumbent partner who sold the transaction initially. The key for any subscription service is adoption and we want to make the process of renewal equally important to our partners so they can better help the customer and make them want to come back.
