'Investment' is key to penetrating SCO market

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Date: Sept. 5, 1988
From: Computer & Software News(Vol. 6, Issue 36)
Publisher: Lebhar-Friedman, Inc.
Document Type: Article
Length: 727 words

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Santa Cruz Operation (SCO), developer of the Xenix operating system, hopes to penetrate the Fortune 500 business marketplace by reaching out to the reseller channel. SCO Pres Larry Michels says that the future of the company's business is its resellers and making them successful. SCO recently instituted a three-tiered program to recruit authorized resellers which is now beginning to yield positive results. The inclusion of resellers at SCO Forum '88 is indicative of the company's belief that its future lies with the channel.

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'Investment' is key to penetrating SCO market

SANTA CRUZ, Calif. -- Xenix developer Santa Cruz Operation, hoping to penetrate the Fortune 500 business marketplace, is trying to send a clear message to resellers these days.

The message: "The real future of our [SCO's] business is resellers. We have to make our resellers successful," said Larry Michels, president.

Last spring, SCO began a three-tiered program to recruit authorized resellers and the push is now beginning to yield positive results.

SCO has authorized about 1,730 resellers from nearly 2,000 applications received thus far. About 230 of those are upper level dealers, which will account for the lion's share of the push.

"Investment" is the key word, Michels said.

It's a partnership arrangement, Michels believes. SCO has to demonstrate a willingness to invest in its resellers, so in turn, resellers will invest in SCO.

Indicative of the company's belief its future indeed lies in resellers, was the inclusion of resellers at SCO Forum '88 recently.

The week-long event introduced last year initially was designed for developers, but at this year's forum, resellers were invited to participate along with developers with what Michels said were encouraging results.

SCO has no direct sales force at the present time and by trying hard to avoid cross-channel conflicts, the firm expects to attract new resellers.

While SCO's president admits that some channel conflict is inevitable, "We have made provisions in reseller contracts giving our resellers the choice of buying directly from us or from distributors."

The company sells its Xenix solutions through a handful of regional distributors as well as three national distributors including Ingram, Softsel and Micro D. SCO expects to sign a fourth major distributor, Arrow Electronics later this month.

SCO is encouraging its distributors to support level two resellers, where much of the firm's attention is focused.

Kera Martin, manager of SCO's reseller program, said each reseller application is processed at "Level One" where no training is required and the reseller makes no volume purchase commitment.

SCO processes the applications and based on the reseller's business potential, determines whether or not a prospective reseller is a candidate for level two or three, she said.

Advantages of the upper levels include greater discounts although more SCO training is required and provided. Support levels vary depending on level of authorization.

Said Martin: "We like companies [resellers] that are innovative and can add to our product with their own creativity and sell themselves as a provider of solutions."

"Level two is the mid-level commitment many resellers feel comfortable with."

By design, SCO is hopeful level two resellers will eventually migrate to level three, she said, and they will if the program is successful.

At one time the company said it was seeking as many as 5,000 qualified resellers by year's end.

However, SCO's Michels said he has no firm figure in mind. Rather SCO's strategy is to seek enough authorized resellers for strong geographic representation.

Separately, SCO and AT&T jointly announced that SCO will be licensed to use the Unix trademark for its future Xenix releases which has always been based on the Unix operating system.

That announcement, the first such exception to past policies, is expected to have little if any impact on SCO resellers and customers, Michels said.

Xenix is Unix but because of AT&T's trademark policies, SCO (or anyone else) couldn't use Unix in their product name, he said.

AT&T's decision is more for the benefit of SCO's Xenix developers, Michels explained. However, it should also ease any concerns of SCO resellers and end-users that they might be stuck in a proprietary corner.

The name change of SCO's product will occur with the next release of an SCO operating system. That product, SCO Unix System V/386 Release 3.2, will be available to developers late this year and will ship to resellers in the first quarter of calendar 1989.

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Gale Document Number: GALE|A6952109