Eric, I would like to share perspective from an ex-NOVL VAR:
NOVL made some major changes in the channel that not only caused the smaller VARs to get out. They raised the education requirements, and also broadened them. In the case of our firm, they told us to get people certified in additional products that we had no intention to sell. We were in the "UNIX Master Program", where we specialized in linking existing NOVL networks to UNIX environments.
Margins: There is very little money in selling NOVL software for the VAR. Margins are typically in the 10 point range. The money comes from services, and additional hardware driven by the software.
Furthermore, there is "basically" price-parity for the small to mid-size VAR. Costs between the distributors is rarely more than a few points, with exceptions for specials and promotions.
Price erosion: A few years ago, when NT was coming out, I went to a NT seminar given by Bill Gates. One line he had really stuck with me: "There are more AUTHORIZED Novell resellers than 7-11's. Therefore it is easier to get a copy of Netware than it is to get a Slurpee." Translation ... NT systems vars will bump into each other less frequently in competetive situations.
I was the Regional Computer Systems Sales Manager for a national computer distributor from 91 to 93. I can tell you with 100% certainty that VARs have no loyalty. They will always follow the money. More money is in NT and UNIX than Netware. NT runs on non-commodity iron (Alpha, PowerPC, others), and enables a VAR to make money selling larger systems that can't be bought at discount Bob's PC palace. This isn't cynical, as a financial analyst, you can appreciate how cash-poor and under capitalized the little boys are. Their purchasing agents spend hours on the phone shopping around to save a lousy $50.00!
Furthermore, NT and Netware both do a pretty good job of meeting customers needs, and in any given PC network configuration, the NT solution will cost the VAR less $$ to buy the software. (This may be up for debate, as I haven't seen comparative pricing in the last few months). In a situation where an end-user is shopping, which is most of the time, the var with the lowest cost-basis will usually win out.
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