Can Small MSPs and VARs Earn Recurring Box.net Revenues?
In the cloud services market, Box.net is doing a lot of things right. The company’s online file sharing and collaboration software is wildly popular. And Box.net’s cloud partner program allows VARs and MSPs to earn recurring 30 percent margins. But read the fine print: Some smaller VARs and MSPs say they aren’t large enough to meet Box.net’s partner program requirements for recurring cloud revenues. And now, some of those partners are seeking Box.net alternatives.
First, what’s right: Box.net is growing fast and set to raise more money. In the channel, the company allows partners to control end-customer cloud billing, and Box.net’s recurring 30 percent cloud margins are among the most generous in the IT channel. Krish Parikh, senior manager for business development at Box.net, explained the Box.net channel strategy to Talkin’ Cloud in this July 2011 FastChat Video:
Requirements to Earn Recurring Revenues
Now, the piece that has some smaller VARs and MSPs upset. Some VARs say Box.net’s recurring revenue partner program has changed and the new requirements are now too lofty. The reseller program, according to some channel partners, requires partners to sign up for a yearly revenue target based on company size and customer demographics. The minimum target, those sources say, is $20,000 — or about 200 users. Meet or exceed those targets, the source say, and you’ll generate recurring revenue.
If you don’t qualify for those levels, Box.net also offers a referral program, which offers partners a one-time commission.
Talkin’ Cloud asked Box.net’s Parikh if the partner program had changed, and if Box.net had implemented new requirements. His reply:
“Thanks for reaching out for clarification. The program is actually the same as during launch.
In an effort to recruit and train partners who are committed to reselling Box, our resellers are signing up for a yearly minimum revenue target for Box based on their company size and client demographics.
For partners who do not wish to deal with selling, billing, or supporting Box, we have the Referral program that involves zero investment. This program is also suitable for partners who only have an occasional need for Box and don’t want to make the commitments required for the Reseller program.
The two programs provide complimentary ways to introduce Box to clients and receive compensation. Let me know if you have additional questions.”
Bottom Line: It sounds like some small VARs and MSPs feel like the rules of the game with Box.net changed once Box.net launched the formalized, two-tier partner program. Some of those small VARs feel as if they helped Box.net build its channel business, only to discover they couldn’t meet Box.net’s requirements to earn recurring revenues.
I spent about an hour at Box.net’s offices back in July. I believe the company is channel focused and channel friendly. Parikh answered all of my questions point-blank. Sharp guy. But some small, influential VARs and MSPS — companies that have mastered the recurring revenue model — are feeling alienated by Box.net’s program requirements. And some of those partners are now seeking alternatives.