Distributor withdraws from advanced partnership talks at the last minute

Security distributor Sphinx has added to Fortinet’s ongoing channel woes by withdrawing from advanced talks with the unified threat management vendor.

Fortinet said it was appointing Sphinx and dropping Noxs following a distribution review, but the Juniper distributor pulled out before the paperwork was signed, leaving just Voicecomms Warehouse on board.

Insiders claim the deal was derailed because of pressure from Juniper and concerns over Fortinet’s unusual revenue recognition model.

However, Mark Hatton, managing director of Sphinx, played down the drama. “We had a couple of conversations with Fortinet, but decided not to proceed. We concluded there was significant growth to come in our Juniper business and we would rather put our focus there,” he said.

“The issues Fortinet has had with previous distributors were caused by the way it accounts for revenue. It recognises that that needs to change.”

Fortinet is already working on signing up a replacement. VADition and Cohort Technologies are believed to be among the three other distributors on the vendor’s shortlist.

Kay Eggleston, managing director of Noxs, said: “I think Sphinx will have looked at the contract and seen it was all one-way traffic.

“Fortinet operates a sales-in distribution model, so there is considerable pressure at the end of the quarter to help it meet quotas. Its distributors also have no stock rotation rights in their contract, which may also have put off Sphinx.”

Dave Ellis, director of e-security at security distributor Computerlinks, said: “It is rare that vendors operate a sales-in model because it encourages them to fill the warehouses of their distributors so they are left with stock they cannot sell.”

Andy Travers, UK channel director at Juniper, said he was not aware that Sphinx was in talks with Fortinet and denied the vendor had discouraged it from signing the deal.