Seagate changes distributor relationships, reduces workforce 26 May, 2009 By Chris Talbot

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According to Forrest W. Monroy, a Seagate spokesperson, Seagate reduced its workforce by approximately 1,100 people across various job functions.

"This included some individuals in sales and marketing, and some of our 'pull through field sales organization in the U.S. channel. However, we continue to maintain a very strong and extremely talented team, focused on our most critical business segments that are served through the channel," Monroy said in a statement when asked about the layoffs of the channel team.

Although some reports have suggested Seagate has virtually eliminated all of its channel sales and marketing teams, Monroy denied the claims and noted they were inaccurate. Seagate is not releasing the names of people affected by the layoffs out of respect for their privacy, he said.

Rumors had suggested that both Tech Data and Arrow were affected by Seagate's changes. Tech Data was unavailable for comment, but Arrow spokesperson John Hourigan confirmed that there had been changes to its relationship with Seagate.

"Arrow will simply be returning to a previous business model we had with Seagate that allows us to support our customers that require Seagate products," Hourigan said. "Arrow retains full access to Seagate products used in our systems integration business (e.g., Arrow's OEM Computing Solutions business), which is where we sell Seagate products."

Michelle Warren, president of MW Research & Consulting, said it was hard to believe that Seagate would completely cut its entire channel sales team.

"They can't eliminate their channel completely. That would not be a solid business model," she said. If they're laying people off, that's when they'll really need their channel realtionships, she added.

Warren noted that if Seagate has pulled back a bit with Arrow and Tech Data, that probably means it will open up additional opportunities for the other distributors Seagate deals with, including Synnex and distributors focusing specifically on system builders.

"We don't know why they would have pulled back on Arrow," she said.

Additionally, it could give more leverage to Seagate's competitors -- such as Western Digital -- in their channel relationships, Warren said.

"It's tough to be a sole hardware vendor these days. Certainly with the push toward services and total solution sales, it's tough to focus in on one group of hardware products," Warren said.