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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: MJ who wrote (9473)	2/13/1998 7:13:00 PM
From: Mark Finger	Read Replies (2) \| Respond to of 14631

Matt, There are two other ways that the channel was stuffed, and these are common to nearly all software vendors that use the "channel" or have VAR's. First, most distributers are given a minimum initial order size for new products or major new product versions. The problem is when the minimum order size stuffs the total channel (all distributers) with more product than it can reasonably move in about 90 days. Informix changed the way it serviced smaller VAR's by setting up distributers in early 1996. This was about the time it was bringing out its NT line of products, and made a lot of sense. However, apparently too much product was apparently forced on the distributers for what they could sell through. Second, new VAR's are often given initial order sizes to get into certain categories (they get different levels of support, co-selling, ....). I do not know the level involved, but an important level maybe at $100K (another break may be at $500K or $1M). When Universal Server (now Unversal Data Option) came out, a new group of VAR's wanted to develop for this product, and some of these would have been ones who were not previously significant IFMX VAR's (or IFMX may have imposed an additional purchase requirement). Since these VAR's would have had to develop applications before they could have sold them, the run-time product would have sat on the shelves during the development time. Further, even if they had a fast development time, the product was not really stable enough to deploy for certain features until summer or later, so the these VAR's would have had to wait until the bug-fixes were available (unless they wanted to take the same PR hits IFMX was taking). The above two examples are very typical throughout the industry. The only protection there is the kind of accounting IFMX has instituted. I believe MSFT also uses this accounting, but very few others do this accounting (note that Sybase and Oracle do not, according to what I see). Matt, you did identify one area of "channel conflict" that may exist, but IFMX credits salesperson for sales by the 3rd party, so it is to the advantage of the salesperson to identify the target hardware/application and work with that sales staff if they are holding unsold licenses. This is an area where IFMX really took steps to reduce conflict. Mark