Security safe from downturn

CRN: Should partners be concerned about the economic downturn affecting revenue?

Rodenbaugh: I’ve met with partners in Brisbane and am meeting with partners in Sydney and I know that’s a common question that’s going to come up.

In our business, we generally believe that the last project a company will reduce is going to be security, particularly in economic downturns. In some measures the security risks actually become greater in this sort of environment.

You’ve got people walking out the door – that creates an environment that is potentially laden with risk.

We don’t think that many companies can aggressively downsize their security investment. We don’t think they’re going to dramatically reduce their spend in security.

I believe that’s unique to security, I think within IT you’re going to find a lot of reseller partners are telling us that a lot purchases of hardware, networking upgrades and new applications, they’re seeing some level of delay and customers are deferring this until better times.

We’re not yet seeing that same sort of response in the security response. In our quarterly report our CEO took the position that he felt like we were largely insulated from downturns in the marketplace.

CRN: What about the SMB space, is that also insulated?

Rodenbaugh: We’re going to probably see some softness in our consumer space, our consumer business is heavily dependent upon individuals who are buying new computers and that market is clearly impacted so clearly it’s going to start there in terms of where it’s going to affect us.

We believe that we will probably see some of that turning up in the small end of the SMB space, how far that goes I don’t yet.

The general reaction from the partners I talk to is that people are asking questions, they’re expressing concern, but not seeing them changing buying patterns.

It remains to be seen whether we see an impact over the next six weeks that makes up this quarter, but we haven’t seen it yet.

Our mid-market has proved to be the fastest in five years worldwide, our overall business grew more than 20 percent, our enterprise business grew 28 percent, so we’re just not seeing it yet.

That’s not to say that we won’t, but the indication so far is to be cautiously optimistic.

CRN: Are your partners asking for any additional help?

Rodenbaugh: Most partners who resell our products look at us as a relatively profitable line over our competitors.

In fact I had this conversation with some partners many times around, we’ve worked very hard to make sure our line is profitable for our partners.

So, we are not going to step back from that, we’re going to continue that strategy to the extent that when partners need help from us in terms of sales assistance and marketing assistance, we’re going to continue the things we’re doing.

We’re not going to reduce any of that based on any of these times.

CRN: What are some programs that can boost their confidence?

Rodenbaugh: We have a program, Deal Registration, where a reseller would come to us and say, hey I have this new opportunity, if they bring us the opportunity, we’ll actually give them margin enhancement through incremental discount that we pass through to them for them having found the opportunity and brought it to McAfee.

That’s a program we initiated in some of the larger regions, and are now rolling it out into the APAC region as we speak.

CRN: How important is the channel to McAfee?

Rodenbaugh: There have been a lot statements by others in the marketplace by some of our competitors about different things that they’re going to do with the channel.

Some of the relatively famous statements from Symantec COO around a plan to take a lot more business direct, a plan to take a lot of the low end of the business direct online.

We are absolutely not about that, in mid-market space in particular we absolutely 100 percent of the time will take our opportunities through our reseller partners.

I don’t think we even know how to take it direct, we don’t even have the systems or structures to go direct, I don’t think we could.

We’re recommitting our position with the channel and I have that dialogue with channel partners who ask that question, ‘hey I see others decreasing their focus, and lowering their investment, reducing channel account management, what are you guys doing?’ We’re just not doing that, we’re doing the opposite, we’re staying consistent with rebate programs, we’re pushing every single mid-
market transaction that goes through our channel partners, unquestionably.

In fact, we’re actually increasing our channel account management force. Globally it’s 20 percent increase, we’re also redirecting the channel teams we have today to refocus on the small and medium mid-market space.

Largely, because we believe that’s where channel partners most effectively play.