Sun hikes MDF for resellers and relaxes rules

Sun Microsystems has finally upped the level of marketing development funds (MDF) top tier partners can accrue and it is far more flexible on how its channel spends the money.

As part of Sun’s umbrella channel programme, the Partner for Growth scheme will pay Executive and Principle level members 1.5% and 1% MDF respectively each quarter based on their revenue.

Talking to Microscope, Paul Flannery, Sun partner sales director for the UK and Ireland, admitted that MDF had not increased because funds had been cut during troubled times.

“We took the money in-house to drive marketing and [under the] economic conditions we needed to get back to profitability…that was key for Sun and our partners going forward,” Flannery said.

“Having used the money to get us there we are now putting it back into our partner base and enabling and investing in them to drive a much wider product set,” he added.

The investment represents a “significant number of millions of dollars, a significant investment particularly in the current climate” Flannery stated, adding it was an increase of 50% to 100% but refused to say more.

“It is based on the actual revenue a partner achieves, if they don’t have a great quarter they do not generate funds but if they have a spectacular quarter they will generate solid funds,” he added.

The money will be paid at the start of each quarter, compared to every six months as had been the case all those years ago and must be used to generate demand through proof of concept and demo equipment.

Top tier Executive and Principle partners represent 10% and 40% respectively of Sun’s 300 UK partners.

The MDF offered to partners by Sun had increased Greg Carlow, managing director at Executive tier partner Repton, confirmed and the vendor was also being more flexible about how the marketing dollars were spent.

“Our marketing people always moaned that Sun wouldn’t give them money for certain activities. But that has changed now and Sun seems to be pushing hard,” he said.

Geoffrey Strage, sales director at BSI, said Sun had taken a step in the right direction: “We are pleased to see that Sun is more open-minded than many other vendors we deal with.”

“There were a lot of tight rules on how the money was spent, there are still rules but they are now less constraining,” he added.

In Sun’s fiscal year 2004, 2005 and 2006 it made losses of $388m, £11m and $864m respectively but in fiscal 2007 and 2008 the vendor’s bottom line improved with profits of $473m and $403m.