Twenty years ago, we created a campaign to tout the value of the channel and challenge the notion that the channel was poised for extinction. It was called “Change the Channel”. It was a time when direct vendor marketing was gaining momentum. Dell was dominating the market with massive direct sales growth. Apple was gearing up for their direct to consumer strategy. Dotcoms were the big rage as everyone raced to sell directly to the end-user. The channel was being shunned by many vendors and there was a feeling in the air that their days were numbered.
Our position back then was that the channel was simply too big to fail. The channel represented tens of thousands of resellers and hundreds of thousands of employees. How can a few direct companies demolish such a large number of resellers? Combined, the reseller channel out numbered all of the direct vendors, by many times. Even with the dotcoms exploding growth, it just did not seem possible that the channel could disappear.
It’s 20 years later and guess what, the channel is still here. Dotcoms had a melt down. DELL has since switched to the channel and abandoned their direct strategy. Apple is the only exception as they continue with a strong direct model although the channel still plays a role. I will leave others to express their opinion on Micorsoft’s current position on the channel.
Once again, everything-as-a-service is threatening the channel into extinction. I will repeat what I said 20 years ago. It is not going to happen. Every vendor always seems to forget one important thing. VARs and MSPs own a lot of the relationships with the end-users and it does not matter how many people that vendors hire to sell directly or how good the marketing, it will never trump the collective power of tens of thousands of channel partners.
Every VAR and MSP has a certain amount of customers that they control with a very strong relationship and history. It will be a fool’s game to try to pry these clients away from the arms of the channel partners. Reminds me of Charlton Heston’s famous comment “You can have my gun when you pry it from my cold dead hands”.
History has proven again and again that VARs and MSPs have an incredible amount of resiliency and you can never count them out. If you are a VAR or MSP still in business today, you have lived through just about every business plague possible including the infamous global financial meltdown. You survived!
What’s different this time is the sheer number of Cloud vendors rallying to get their hands on the end-customers. Pretty much every software company is selling directly to the end-users and the software subscription is fully automated machine to machine. These end-users may be getting pulled away from the traditional channel.
The server business has since transferred into data centers with pay for what you need subscriptions. Spinning up virtual servers is now very easy and many big players are offering the service with high performance and support levels.
Most alarming is that complex services can now be managed remotely. Many MSPs have invested heavily to set up their NOC services to manage their clients remotely with good customer satisfaction. Even this is now under attack as private-label NOC players from various countries are entering the market in an attempt to take over this piece of the business.
The level of complexity in today’s marketplace is definitely something that the channel will have significant challenges to digest and compete against. On top of this, many of the older VARs are gearing down to retire. Less “die-hard” types to fight back. This time, the channel may not be able to simply ride out the storm.
That said, I am still betting on the channel with one caveat. The channel will realize that they must adjust the ways in which they do business in order to deliver the consumption-based IT that the end-users are demanding. We are already seeing significant numbers reinventing themselves to meet the challenges of the next generation of the channel. With the help of the VAR Office Suite resource, we are rolling up our sleeves and diving in to help more to transition into the new business model.
VARs and MSPs can quickly find everything they need to transition in the VAR Office Suite resource. Most of these independent tools and services were actually developed by VARs and MSPs. Who would have predicted that the channel would have created the tools necessary to save themselves?