More of the same really.

We had 2 major bankruptcies in 2023 – GTT and Avaya. We also have a bunch of shaky balance sheets to watch in 2024. Lumen is refinancing. A few providers have activist investors who want to spin off assets to maximize the P&L for the stockholders (like Frontier). We will see a few more BKs in 2024.

Pricing for UCaaS, CCaaS, DIA, Waves, EPL have all been decreasing. That doesn’t leave many product groups to keep margin afloat. This goes back to the previous paragraph.

We have partners who are 2 or 3 years into “retirement” who will be back to selling. That is all I am saying.

Since UCaaS growth is slowing and most of the small business PBX replacement that can be done is done, it will be transactional sales in 2024: Microsoft Direct Routing, SIP Trunks, POTS Replacement, and 5G FWA. This is the fastest path to cash for partners. Fast to sell, to implement and to get paid. It is also the least sticky product.

Omdia is saying that PBX owners will stick with PBX  in 2024 and 2025.

I don’t know how the cloud comm providers can continue to pay such large SPIFFs, but that will continue for at least 2 more quarters.

The UCaaS space already has too many providers who say the same thing. In 2023, Verizon wrote off a $400M acquisition of Bluejeans video conferencing because that product was just not going to grow. Ericsson wrote down $2B on its Vonage acquisition. I see a new provider in the cloud comm space every week. I don’t know how they all survive. Plus I don’t know how they all can service clients and secure the service with a decreasing ARPU.

There was supposed to be a bunch of consolidation in UCaaS, but I think that the price tag to buy seats is just too high. The cost of sales is high, so service suffers. Service in delivery, ongoing support, user training, etc. There is a mentality that customers will self-serve, but that isn’t happening. Instead we end up with frustrated customers, who churn.

UC+CC will put added pressure on pure play CCaaS, who are already facing huge competition from new entrants like ServiceNow, SF, Aircall and UJET. If Microsoft gets into Contact Center, I wouldn’t want to own stock in any other provider.

With Broadsoft gone and Metaswitch now an Azure NFV offering, larger providers will need to reconsider the future of their voice offerings.

The PE backed ISPs will be looking for a voice offering. This will fuel some white label agreements for voice. You don’t need to sell the full spectrum of UC+CC. You can simple sell SIP offerings from a CPaaS platform.

Comcast just had a data breach. When you look at the long list of breaches, it seems like it gets easier and easier for the hackers every year. As companies use more outsourcing, the chance of breaches would seem more likely.

Cyber-Security is hard to sell, but I see Cyber Insurance entering the Channel in 2024. That requires a bunch of CyberSec service so this will be a huge win for Agents, MSP, Insurance and MSSPs.

With BEAD fund flowing in 2024, you will see a lot of M&A in the ISP space. 2023 had a large number of small deals, but this will increase as BEAD winners emerge and start to put the fiber in the ground. Right now the magic number seems to be 40% penetration on FTTH.

Although USTelecom says broadband pricing is dropping, they mean per MB. The average bill for broadband is actually stable or up for most large ISPs. TV subscribers have decline HUGE! So being sticky with Internet and some voice play (Cell or VoIP) is a helper. Home Security or Smart Home are big components to ARPU and sticky.

There will be a lot of JV (joint ventures) in 2024. AT&T did one with a PE firm for FTTH projects. Even astro turf groups like Technology for Rural America will JV for broadband (if they can score grant money).

I don’t mention AI because it is all hype until the tires leave tracks on the road. And we are not there yet.

I have seen too many RIFs and too many Musical Chairs to think that any provider will have success in Q1 and Q2 2024. It will be rough.

Train your sales and channel people!! Call RAD-INFO to help you with that: (813) 963-5884

This was quite a year.

Avaya went bankrupt again! They think they came out smelling like a rose, but they are donating customers to other providers every day.

Mitel doubled down on on-premise PBX by buying Atos.

UCaaS revenue growth stalled out! The CAGR is single digits now (negative growth for 8×8 this year). This is partially due to Microsoft; partially because Zoom hit 7M phone subs by charging on average $6.61! So on renewal the customer pays less, like telco circuits. The industry is in a price compression phase.

And Mitel didn’t double down on PBX because sales had dies; in fact, PBX sales are still up overall. That doesn’t bode well for the thousands of providers offering HPBX/UCaaS.

Everyone shifted to UC+CC and some CPaaS (SMS, omni-channel). Then everyone started talking about AI. EVERY ONE, every day! Lots of hype; lacking actually use cases with concrete benefits.

More M&A in the partner world. The Super Agencies continued to buy up partner agencies. And new PE-backed entities emerged to spur the M&A along.

Data center is growing because all that cloud and AI has to be housed somewhere!

5G! The Fixed Wireless 5G took off in 2023. T-Mo, AT&T and VZW sold millions of subscriptions.

Fiber broadband got a boost from BEAD to the tune of $42.5 Billion! Then private equity bought up some CenturyLink assets, mom-and-pop ILECs and even a couple of ISPs, poured millions in to build out FTTH. Some of this was no doubt fueled by the ACP (Affordability Connectivity Program) that sunk $14B into funds that allowed 21M households to get help paying for the world’s most expensive broadband. So not only does the federal government use tax dollars to fund building these private broadband networks, it then uses tax dollars to fund paying for the subscriptions too! That is kind of ridiculous. Great for the ISPs (and PE firms), lousy for the tax payer.

UCaaS Players didn’t do a lot of M&A because quite frankly they couldn’t stop playing Musical Chairs. Heck, RingCentral’s new CEO didn’t last 4 months, but got to pocket almost $10M! Vonage was acquired by Ericsson, who wrote down $2B of that purchase. 8×8 had its own set of musical chairs. So did Nextiva and many more.

Truthfully, when you look at the UCaaS space in the US, no on has a clue what the hell they are doing. It is a mess. Squandered opportunity, money, brand, people. Hardly any provider owns a vertical. Weave being a noted public exception. And at this point being the generalist UCaaS provider means selling seats at $12.

This was the year that MDF was going to go away. Parties, sporting events and other LinkedIn picture chances were supposed to slow down in favor of more customer focused, sales producing methods. Notsomuch in 2023. Maybe next year we will get MDF Reform.

TBI was the second to last big Master Agency to go. AppSmart picked it up. The employees got screwed by Geoff. Then the inevitable started: Reduction in Forces.

2023 was the year of “You’re Fired” or “I Quit”. It happened at vendors, at brokerages, at telcos, at Twilio, at Velo, at Nextiva, even at cybersec companies.

Between the Employee Musical Chairs and the macro-economics, nothing much could get done in 2023.  All that PE money that was supposed to build better mouse traps and provide so much assistance to partners didn’t quite make it. If it did and I missed it, please drop me a note.

My experiences in 2023 are of brokerages that can barely process an order and truthfully some vendors can’t process an order either. Too many steps with too many people who have no backstop. It creates a mess.

The telecom process requires swivel chairs. It always will. Too many legacy processes and systems to ever automate them for efficiency. Those chairs require people in them. RIF all you want but it damages sales, customers and partners.

Since we have 2 weeks left to the year, I am certain a new white-label UCaaS provider will emerge.

Last year, I predicted that in 12-15 months a TSB would fall. It didn’t happen yet, but all the signs are there.

Many companies acquired 3-4 years ago by private equity are now being sold. The IPO market isn’t great so they are being re-packaged and sold to a bigger PE firm. You can see it most clearly in the MSP space as the MSP software vendors are mostly PE owned.

The Cyber-Security space was supposed to heat up sales wise, but instead there was a lot of M&A in that space. And many layoffs. That kind of got in the way of success.

Lots more of the same coming in 2024. With the Presidential election looming in 11 months, it will cast a wide shadow over the economy and markets.

Want to hear some predictions for the Channel in 2024? Tune in this Thursday (12/21) at 3:15 PM Eastern time: https://lnkd.in/eAErktx

This is one example of the ChatGPT inspired emails that get sent to partners. Sorry for picking on this vendor, but it was awful.

My name is XXXX and I am a Channel Development Manager here at NordLayer. I wanted to inquire if you had a chance to stop by our booth during the Intelisys ScanSource event and if you would be interested in reviewing us as a potential vendor for cybersecurity. 

NordLayer is an adaptive network access solution designed for service providers and is an ideal solution for any modern MSP looking to enhance their revenue opportunities.

I would love to schedule a brief demo for you and your team to showcase the features and capabilities of NordLayer. Please choose the most convenient time for you via this link.

Let’s break down all the issues:

1. How do you not know if I was scanned at the event mentioned? That is either lazy or incompetent. Either way is that a company or Channel Manager you want to work with?
2. What is an “adaptive network access solution”? Zero points for the new term since this email is supposed to grab my attention – not confuse me.
3. Great for an MSP?! Then why are you emailing an Agent?!
4. Immediately with the ask!  Without explaining the product, Value Prop, or anything of value. This isn’t Tinder! This is a business.

I will be happy to write your email copy for you. I would be happy to help your firm with their channel marketing.  Call 813-963-5884.

In the past month, my inbox was overflowing with email from vendors. The ones that begin, it was nice to meet you at… immediately get deleted, because it usually didn’t happen. I know they are automated emails, but why start a relationship with an automated email and a Lie? I have to trust you and already you treat me like a number and someone to pile manure on in order to get an order. This is actually the whole problem with Channel Marketing.

Everyone treats Channel Marketing like a game of numbers. It isn’t. Unless you are AT&T, Verizon or Comcast, you don’t need thousands of partners. Heck, RingCentral claims they have access to 200K sub-agents!!!! [Note: there aren’t that many!] Yet RNG has seen growth decline. So has 8×8.

Most programs need less than 100 Aligned partners. If you don’t know what that means, please read The Book.

But back to the Marketing. There is a huge push on cybersecurity, yet NONE of the emails contain a specific use case. They DO contain a bunch of acronyms, which are useless.

I understand it is hard to do outreach. It is Basic Prospecting. Yet we are in a relationship business. I have to like you and trust you to lend my reputation to recommend you. Re-read that last sentence because it is VITALLY important.

Vendors hire channel managers hoping they have a rolodex of partners ready to sell for them. That is erroneous thinking. What were they selling before (cable?) to whom (VSB?)? Is that they same Buyer?

Recently someone came to me for help. They thought this channel could get around PR and marketing agencies into the CMO office of large businesses. I had to explain that this channel does not often sell to a CMO. And while more and more partners are going upmarket, if you believe the reports, over 80% of channel partners sell to SMB. The real small business of less than 500 employees.

Do you have a Target Customer?

Do you have a Partner Profile?

If you don’t have those 2 items, your program sucks. It is working on Hope as a Strategy.

Every segment of the channel has a different business model and a different motivation.

Many MSPs prefer to sell UCaaS/HPBX as white-label for the control and billing aspects. Yet Agents do not want to bill and collect. Which segment are you chasing? What message are you using?

In a blanket email about security, the message will be ignored or lost by most partners who receive it. That has not stopped vendors from firing emails out their martech machines. In a recent article, the vendors also want partners to fire out similar emails to prospects. It is so weird to me that in 2023 we are still spamming and not trying for a better targeted message. There was  a time – mid-2000s – when the marketing shows talked about marketing 1 to 1. Now we are back to just generating spam.

You know what the problem with that is but you ignore it. Eventually they just ignore ALL your email. You have done Brand Damage.

There are a ton of ways to get a message across and no one uses it, because it is far easier to just shoot out large quantities of email and hope for a 1% hit rate.

 

I drove over to the Scansource event in Orlando yesterday. There was some hope that Scansource would announce a replacement for JD, but no. They may be taking their time or candidates are interested. It will be a hard job trying to teach Greenville HQ that partners may seem like Customers but that calling them that doesn’t produce the correct sentiment.

The term Partner congers up one image, meaning, definition; Customer quite another. This may be the disconnect that can’t be fixed.

As I walked the expo floor, I saw many Distro vendors like Zebra. This demonstrates the other disconnect at Scansource: the varying business models of partners. VARs, MSP, Agents, SIs, ISVs – all have different business models. They are not going to change them for you.

This is like the period when AT&T was handing out APEX memberships to Agents. Agents don’t want to hold the paper, bill, collect and do back office as a rebiller. That is a different business model.

Agents don’t want to bill for hardware – laptops, barcode readers, phones or whatever. It also requires a different business license in many states. Now the partner has to collect taxes; fill out forms; and cut a check quarterly for taxes to the city, county and state revenue offices. Can you see how that wouldn’t be a shift an Agent would make?

Recently for a project, I learned that no vendor rebills or resells cable TV bundles. One vendor blamed the FCC; one blamed Comcast; but really it comes down to collecting appropriate taxes and fees for the TV franchise (and licensing).

For that same project, a few vendors wouldn’t touch the voice piece because it is too much hassle for the money! Do you see what I am getting at?

When the former owners of Intelisys left, Scansource had Greenville execs run the brokerage. They lost ground. At this time in the channel, there are too many PE fueled brokerages who will zoom past Scansource, if Greenville doesn’t get its act together.

Intelisys has lost quite a few of its top partners to PE-backed brokerages. It will likely lose more.

The two things that AppSmart and Scansource do the same: (1) Have non-Channel people run the channel business. (2) Push that Hybrid notion. It isn’t a model. It is a notion. A notion that the same org selling 10 seats of UCaaS and cable modem subscriptions wants to sell Dropbox or a barcode scanner.

Empowering the business for partners will need to be job one – and to do that you have to understand what that business (model) is.

I think that Scansource has a small window to pick someone and get the brokerage moving in the right direction – and by that I mean, some leadership and re-building the culture so people stop leaving.

A side note:

Partners are still using more than one brokerage. Most of the partners I spoke with are using 3. That’s 3 shows almost back to back. One partner mentioned that he could literally be at a show or at training every week. Yep. There might be too many partners events. And quite frankly not a lot of valuable take-aways from them. Mainly just the networking and meetings with key people. The one that figures out how to provide the best education will come out ahead. I don’t need a free meal or anyone to pay for my drinks; I need to know about the new services and how to sell them.