The Distributor Side of Things

A recent discussion on LinkedIn around my blog about what Master Agencies call themselves has been ongoing. It even continued with live comments at the CompTIA event in Fort Lauderdale.

Both sides will need to adapt. Most of the servers being bought now are being bought by the likes of Amazon, Rackspace, Facebook and Microsoft. They are not buying through Ingram or Tech Data. That affects their business in yet to be seen ways.

Tech Data’s business model is predicated on two things: logistics of demand and co-marketing dollars. TD and Ingram (and their siblings) live on razor thin margins for hardware. They are pure distribution logistics for hardware and software licensing that is in demand. In a purely cloud world, those warehouses scattered around the globe may have to be refurbished into data centers to house SAAS gear. If they can even pivot that way.

Just to showcase the difference in mindset between a true VAD like Ingram and a amaster agency that calls itself a VAD, look at this article: UCC Solutions: What’s Trending in 2016? by Ingram Micro. To Ingram, Logitech ConferenceCam Connect, Sennheiser Presence UC headset, Jabra EVOLVE and Plantronics Voyager 5200 UC. Is that what is trending in UC&C? Or is that what hardware is selling (or more likely being promoted)?

For years, we have waited to see if Insight or D&H or SYNNEX would buy a master agency in order to ramp up the shift to MRR. It hasn’t happened yet.

Now that ADTRAN is pushing its hardware-as-a-service model, VADs have to consider what that means to their meager margins, sooner rather than later.

The other shift that will affect the VADs is the shift to SD-WAN. This means white box CPE in place of routers, switches, IADs, etc. The SD-WAN appliance will be just hardware with the software control coming from the SD-WAN provider. That may affect distribution of CPE too. Does the MSO or CLEC drop ship CPE from TD or Ingram?

In the Faces of July gallery on CP, the number of companies that I have never heard of reached a new high. Someone mentioned at CompTIA that 600 new vendors entered the market. At the same time that the number of channel partners is actually shrinking.

I look around the room at these conferences and see mostly gray hair and bald heads. There are not a large number of folks under 30 in the crowds. Consider the number of mergers in the partner space as older partners ramp out or look to retire.

One joke about telecom is no one got here on purpose. Our sector isn’t recruiting on college campuses or advertising the joys of channel partner life. This is a heavily sales dependent business. How many people go to college wanting to be in sales?

A lot of different pieces are on the table. It will be interesting to see how this puzzle is put together.

Tags: change, channel partners, CPE, hardware, ingram, master agency, SDN, tech data, VAD, WAN
Related tags: being bought, hardware software, ingram, hardware, number, business