Sun revises anniversary sale in wake of fallout

Sun Microsystems Inc. has had second thoughts about its silver anniversary celebration sale that left its commercial and government resellers puzzled, peeved and potentially a lot poorer.

When Sun announced Monday a two-week promotion during which customers could buy selected servers, storage and software products at drastically reduced prices directly from Sun's online store, resellers reacted angrily to their exclusion and said they could not match the steep discounts, which were as high as 65 percent.

They predicted that the sale would cost them hundreds of thousands of dollars in lost orders.

During a conference call Thursday with several key channel members, Sun announced steps to redress the complaints and mitigate potential lost revenue.

"We regret that this promotion was not more fully inclusive of our partner community. Early results have shown a higher than expected amount of interest and activity," Sun told Washington Technology in a statement.

Sun added, "We underestimated the extent to which promotional pricing could overlap with proposals in process either through our partners and our direct sales force and believe this solution quickly addresses the issue."

The statement said: "Effective immediately, the sale will include three new elements that directly add value for Sun partners. First, resellers can register deals that were generated by the reseller, but ended up being transacted via the Sun [online] store; second, customers can indicate the partner they have been working with so that Sun can credit and compensate partners for this business; and third, partners with deals in process that meet the sale criteria, can register those deals."

"Quite frankly, I am encouraged by their reaction," said Alan Bechara, president of PCMallGov. He acknowledged the loss of several large sales within the first few days of the sale.

According to Bechara, the Sun sale is now "purely open market. It's not available on contract. They're still going to let [the sale] run its course until the end of the announced promo."

SearchStorageChannel.com, an online provider of reseller news, quoted Tom Wagner, vice president of Americas partner sales at Sun, as saying resellers will receive a 10 percent rebate on the net price of all orders placed online by their normal customers.

Wagner said Sun will also make a financial adjustment for documented lost sales.

However, he added that Sun "partners are not entitled to any rebates or fees under the promotion for sales that are made to government customers," including federal, state and local agencies, public education institutions or any quasi-governmental entities.

Federal acquisition regulations strictly control government purchasing and rebate plans.

Bechara said he didn't believe Sun unintentionally set out to harm the distribution channel or its partnerships. Rather, he called the promotion an ill-advised attempt to mark the company's 25th anniversary, beat the competition with bargain-basement prices and generate new sales leads.

But with most federal agencies operating on a continuing resolution and tight budgets, Bechara said, "They just made a rotten situation for everybody else a lot worse than it could have been and totally unintentionally."

Bechara said he'd like to think Sun's action will create increased brand awareness and attract new business. "If that's going to help my business long-term, and they don't do this kind of stuff again without making sure we're included in it," he said, "then I think there's some good that'll come out of this because Sun has designed excellent products, superior products in many cases, and they've been the best-kept secret in the world."

But he warned that such large promotional discounts have other consequences. "If I'm a customer out there, whether government or commercial, I'm thinking 'if Sun is running this promo and can afford to give me this much off, maybe I'll wait a little longer and it will become a permanent price.'"