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Oracle cuts channel rebate program after Sun acquisition, causing frustration among sales partners

Oracle is facing heat from channel resellers as a result of a drastic overhaul of the company’s rebate program for federal sales partners. Upon the completion of its $7 billion takeover of Sun Microsystems, Oracle effectively eliminated the rebate program, which had allowed Sun partners to collect additional points after a sale.

Sun channel sales partners are complaining that the elimination of the rewards program inhibits the partners’ overall profitability.

“Oracle has a way of doing business, especially through the channel, and it’s probably the right way from a software perspective,” Gary Brown, executive vice president for a government reseller, told Washington Technology. “But when you’re dealing with hardware, I think there are intricacies and differences between hardware and software sales. Software tends to be much more commoditized.”

Channel partners claim hardware sales involve more installation and testing costs than software – expenses that will unfavorably impact resellers with the loss of Sun’s incentive-based rebate program.

The overhaul occurred in January following the completion of the merger, suggesting controversy over the program cut may not recede anytime soon.