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VMware Boosts Channel Margins

A steadily growing product line necessitated the changes.

VMware rolled out a major boost to channel compensation yesterday, as part of an effort to bring its partners along on its transition from a company focused primarily on one product to a multi-product-family company.

VMware is increasing up-front product margins for Advantage+ partners to a maximum of 30 percent, compared to a previous limit of 10 percent, said Ross Brown, senior vice president of worldwide partners and alliances at VMware. Additionally, VMware is streamlining the validation of deal registration, cutting out any human involvement in most cases to reduce delays and improve predictability for partners.

"We're moving to a model where instead of the approval being held by sales, it's very simple -- if we don't know about the deal it will get approved. At the beginning of the sales cycle, you will know if you're getting the margin," Brown said.

Delays in approvals and the limitation on the top-tier margin made it difficult for partners to justify committing to selling VMware's full portfolio. "Now partners can go and hunt with confidence without worrying about whether they're going to get paid or not," Brown said.

In his current role for a year, Brown said he was brought in to help VMware navigate the sales execution transition from a company that sold vSphere to one that also sells AirWatch, Horizon, Workspace ONE, vRealize, NSX, VSAN, vCloud Air and vCloud NFV.

"It illustrates the transition we're going through from a product that's largely bought, and where customers know what they want and they can get it through transactional channels, to a product that has to be sold," he said.

VMware needs the channel more than ever now to help customers understand how they can benefit from the broader portfolio, according to Brown. NSX, for example, "is conceptually mind-bending for people," he said. "You not only have to understand vSphere but the OSI model from Layer 2 all the way through the application session. You can create networks where every node on the network is its own segment to protect against privilege escalation. The current model is perimeter defense with firewalls everywhere. NSX operates like a hotel where every room has its own key."

Brown described the Aug. 1 changes as a first revision of changes to VMware's partner program that will start coming in a six-month cadence.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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