On Rad's Radar Archives - Page 3 of 376

2 Blockbuster Deals

The VADs (value added distributors) are feeling the pinch of the growth of cloud, SAAS, SD-WAN, managed services – amid the decline of laptops, PCs, hardware and software licensing.

Last year, Tech Data negotiated to acquire Avnet Technology Solutions for $2.6 billion. Avnet TS brings in $9.65 Billion in revenue and will increase Tech Data’s share of data center revenue from just 29 percent to 45 percent. This move also gives Tech Data a presence in Asia-Pacific.

Tech Data competes with Ingram, ARROW, SYNNEX, Westcon-Comstor and to a lesser extent Jenne, ScanSource and CDW.

“Westcon has struggled in recent quarters, with revenue falling 10 percent to $2.26 billion and earnings before interest, taxation, depreciation and amortization (EBITDA) falling 18 percent to $42.9 million,” according to reports. This is not unusual in the VAD space. ScanSource and other VADs have been facing declining revenue and margins due to the turbulence of the IT space.

“SYNNEX has reached an agreement to buy the North American and Latin American Westcon-Comstor business from Datatec,” according to Seeking Alpha. The financials of the deal are complicated and range between $715 and $915 million depending on earn out.

Most analysts have commented that this is a as good a fit (Westcon+Synnex) as TD-AVnetTS. It fills in holes both in line cards as well as geography.

Consolidation is happening at every level of the IT/tech/telecom sector. Less choice for the partner and customer is one result. The other is usually a disorganized organization.

The other blockbuster deal is in the Data Center space. Digital Realty Trust (which acquired TELX) is now buying data center wholesaler DuPont Fabros for $7.6 billion. “DuPont Fabros operates 12 data centers in three major U.S. markets, including Silicon Valley and Northern Virginia, while Digital Realty operates 145 data centers globally.” Dupont Fabros is the data center landlord to Yahoo, Facebook, Apple and Microsoft. Those are nice tenants to have if you are DRT.

This is more than either CenturyLink or Verizon received for selling their data center business. C-Link sold 57 data centers to a group of PE firms for $2.15 billion and a piece of the new firm (now known as Cyxtera Technologies). Cyxtera is a combo of Savvis and Qwest data centers that C-Link paid much more than the $2.5B C-Link paid just for Savvis. (Buy high sell low!) VZ sold its 24 data centers to Equinix for $3.6 billion, which it bought from Terremark for $1.4B.

Dany Bouchedid, CEO of COLOTRAQ, the data center master agency, said, “This definitely establishes DLR in the wholesale colocation space more than ever. Dupont’s data centers are enormous with next gen gear and mechanicals. In addition, Dupont owns their PPE (property plant and equipment) with some of their sites having a decent amount of land. Their PUEs are industry leading and their cooling and UPS technologies are ahead of their time. DLR will be a great platform for them to further market their capabilities.”

Data Center is still a hot sector with PE firms swooping in as well as consolidation by the REITs.

Tags: collocation, data center, ingram, mergers, tech data, VAD
Related tags: dupont fabros, westcon comstor, falling percent, digital realty, center, centers

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Some Thoughts for the Day (Part 2455) – May 03, 2017

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The Data Center Market is at a Peak – Oct 17, 2016

Tidbits #2439 – Oct 03, 2016

The Distributor Side of Things – Aug 03, 2016

Data Center M&A to Start off 2016 – Jan 11, 2016

Lessons from the NGC15 – Dec 10, 2015

The M&A Picks Up Steam – Jan 14, 2015

The Expo News Update – Sep 09, 2014

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June 9, 2017 , On Rad's Radar

Mary Meeker’s Internet Trends

Mary Meeker of Kleiner Perkins puts out an annual report on Internet and Internet related trends. This year it is a 355 slide report. [You can download a pdf version here.] (Here is a 35 minute summary from Mary herself.)

Highlights:

Smartphone growth is slowing.

Global Internet use continues to grow at 10% year over year, with 3.4 billion people on the Internet as of 2016. [QZ]

Advertising is about visuals (pics/vid), measurement, mobile and engagement. UCG (user generated content) is back.

Growth in Internet population is slowing, but growth in online ads is accelerating.

Combined, Google and Facebook accounted for 85% of the total internet ad revenue growth between 2015 and 2016. [QZ]

Amazon Alexa and other voice assistant devices are disrupting Brands as well as text based search. That is going to effect advertising revenue on one hand. On the other hand, Alexa is pushing Amazon house brands over better known quantities in order to push up margins. And they are winning at it!

Customer Service is about real time customer conversations. The Holy Grail used to be single call resolution that was hampered by silos and technology. Today with AI, Cloud, omni-channel contact center, we are closer than ever to that goal.

Retail has some bright spots but requires strong community and specific target market (slide 58). Or Subscriptions. [Funny, I say the same thing about UC/Hosted VoIP!]

For Restaurants, Eating Out is now Eating in with restaurant delivery. Grocery shopping is also about personal and delivery. Do you see where this is trending?

I am skipping Gaming, China, india, except to say that Gaming is a skills school and the old time the phone is put away (as another tech toy has your attention).

88% of U.S. consumers use at least one digital health tool.

“The rise of fitness trackers and health apps are collecting more user data than ever, while hospitals are sharing more health care information with patients. The average hospital holds 50 petabytes of health care data, and the total amount of that data is growing by 48 percent a year, Meeker says.” [venturebeat]

What happens online in 60 seconds: HERE.

Tags: advertising, amazon, customer service, google, healthcare, internet, IOT, retail, smartphones
Related tags: internet, health, growth, meeker

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Stats on Mobile as It Eats the World – Feb 01, 2017

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Tidbits #2441 – Nov 09, 2016

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By the Numbers – Feb 10, 2016

TV is Moving to the Internet – Oct 27, 2015

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June 8, 2017 , On Rad's Radar

The Accordion Channel Strategy

An Accordion is a musical instrument that is stretched and squeezed while the piano like keys are played.

A better analogy might be Thermal Expansion and Contraction.

Channel heads tend to have this mentality of “Let’s sign up EVERYONE!” The more we sign up, the more sales we will make. Logical, but false.

A bunch of things bottleneck this thinking including on-boarding, training and activity of “all the partners you can sign.” See, Channel Managers who are the face of the company to the partner have a physical limit to the number of partners that they can effectively work with. It varies depending on the size, activity and engagement of the partner. But there IS in fact a bandwidth issue — the Channel Manager (or CAM or Partner Manager) runs out of time in the day to read/return emails, texts, calls, quotes, and solve problems.

Another factor to impact this strategy is the co-marketing dollars. Partners want some love. That love comes in the form of marketing funds, attention, speakers (on webinars and at shows), training, etc. A provider only has so many dollars available to spend for this. And again we run into the human resources bottleneck.

If you have SYNNEX, ScanSource/Intelysis and Tech Data as your partners, you owe some fairly big MDF as well as have a duty to appear at two shows every month (sometimes more than two). Travel and time every month.

The contraction comes when the data comes is collected. At some point, you signed up too many un-aligned or un-engaged partners. In other words, the ROI of this false strategy has hit the books.

At this point the announcement is made that the channel is being consolidated to 5 to 10 top master agents. (We have seen this play out at a number of carriers over the years and it will be happening again in the next nine months.)

On the flip side, an agent will use between three and five master agencies for his business. Also, a number of masters have pass-throughs to other masters. There are volume groups like The Agent Alliance. So do you need to have an agreement at all of them? NO!

What could be affecting your sales instead of “not enough feet on the street”?

It could be Demand.
It could be your product is mediocre or is me-too.
It could be the story is boring.
It could be that you are too expensive.
It could be that deployment sucks.
It could be your product does work well.
The Product-Market Fit is off.
Are you too expensive?
Is the compensation below market?
Do you even know how to sell it?
Do your channel people know how to sell it?
Do you even know why people buy it (or if they do)?

Here are three resources to help you.

Tags: channel managers, numbers, strategy
Related tags: channel managers, channel, partners, comes, product, partner

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The Red Velvet Rope – May 02, 2017

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IBM’s Mandate to Employees – May 30, 2017

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How Will the Consolidation Affect Sales? – May 19, 2017

If Starting Today as an Agent – May 16, 2017

Like Cars in the 1950s – May 05, 2017

Some Thoughts for the Day (Part 2455) – May 03, 2017

What Makes Amazon Tick – Apr 21, 2017

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Sponsored by Apex Technology Services, a leading IT Services company

June 7, 2017 , On Rad's Radar

Cisco’s Business at Risk?

“CEO Chuck Robbins’ first orders of business upon taking the helm at Cisco was to initiate a transformation away from hardware and shift to a software, cloud, and recurring revenue model. Last quarter was yet another example of Cisco’s slow but steady progress. Total revenue declined 2% to $11.6 billion,” reports Madison.com.

There is an interesting article on Business Insider about Facebook making switches and routers for themselves. But now a number of telcos globally are trialing the gear. That doesn’t help Cisco at all.

At the same time, the carriers and just about every other managed services provider is offering SD-WAN. These deployments are white boxes. Cisco, Juniper, ADTRAN and others are being replaced at the edge of the WAN by white boxes.

It is also hurting VADs like Tech Data, because these boxes are NOT going through distribution. They are being distributed by the carriers like EarthLink and TPX directly.

ADTRAN is making moves to stave off extinction with hardware as a service, managed wi-fi, and SD-Access.

It’s interesting because Amazon’s Chime is competing against Webex on the collaboration space. Carriers are competing on the WAN CPE space. It’s VAR channel is modeled on hardware sales and installation. Selling software is not nearly the same business model as hardware.

This is just an observation – and it will be interesting to watch as these things shift.

Tags: ADTRAN, change, cisco, hardware, sdwan, VAR, var
Related tags: white boxes, cisco, business, hardware, boxes, carriers

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Will SD-WAN Crush Cisco? – Mar 14, 2017

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Telecom Tidbits #2447 – Mar 03, 2017

The Sub-Agent Dilemma – Sep 20, 2016

The Distributor Side of Things – Aug 03, 2016

Tidbits #2438 – Jun 07, 2016

The Monitoring Master Move – Nov 20, 2015

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June 4, 2017 , On Rad's Radar

IBM’s Mandate to Employees

So IBM is taking a bunch of flack from pulling people back into the office. Some departments are not going to be virtual or remote any more -mostly marketing and design. There are debates across America about this. IBM was the pioneer of work from home with up to 40% of its employees working from home.

The new Chief Marketing Officer was the one who announced to her 5500 employees that remote wasn’t going to work for her. Michelle “Peluso, formerly the CEO of fashion startup Gilt, explained [to employees] the “only one recipe I know for success.” Its ingredients included great people, the right tools, a mission, analysis of results, and one more thing: “really creative and inspiring locations,”” according to QZ.

IBM’s CIO had made it his mission to make the company agile with a small team mindset. “A feature of Smith’s particular “agile playbook” for IBM was that “the leaders have to be with the squads [his word for small teams] and the squads have to be in a location.” [QZ]

IBM has had “19 consecutive quarters of declining sales!” IBM is facing tough competition. In cloud computing, Lotus/Notes, storage and product lines, they aren’t in the top 3. They need to do something different to regain momentum and compete against the likes of Microsoft, Google and Amazon.

Here are a few of the reasons that this mandate might have been made.

Culture. You can’t build (or re-build) culture remotely. Culture doesn’t exist in a vacuum or on a virtual platform.

I understand the marketing teams need to be together since it is very hard to do creative work and brainstorming virtually, despite the cool new tools. It isn’t people huddled in a room mashing it out. Remember that most communications are non visual.

“IBM’s leadership believes that people working together stokes innovation.” [WaPo] “IBM has research on their side. Studies have reinforced the so-called “water cooler effect,” which indicates that employees who work in the same location communicate, collaborate, innovate better and perform better than if they were all working from their homes.”

“Research suggests remote workers are more productive and log more hours than employees who work in the office, and for many companies, offering an option to work remotely helps recruit employees who are seeking better work-life balance or who want to live in a location where the company has no office.” And IBM saved $100M annually in rent payments. However, they need more than productivity. They need a mind melt; dabble labs; skunk works; new blood with new ideas; and agility to fight off cloud providers and the big 5 GAFAM (Google, Apple, Facebook, Amazon, Microsoft). GAFA makes “around $2 million per employee (IBM makes about $200,000 for each employee)”. Cost savings and productivity won’t replace agility and innovation.

Yahoo famously did this. Other companies as well. QZ notes, “Famous tech office perks at Silicon Valley companies, like free food and laundry service, are at least partly designed to keep workers in the office, and the office designs themselves are sometimes created to optimize interaction.” So this isn’t unusual. It just goes against the trend. The trend toward remote workers is a cost savings one.

There is a reason that S&P 500 heavyweights used to spend 33 years on the list – and now less than 15 years!

Tags: change, culture, ibm, innovation, strategy
Related tags: remote workers, employees, office, remote, people, better