How Cloud Computing Could Destroy VARs

[This article originated from Rich Tehrani's (News - Alert) Communications and Technology blog-- featuring the latest news in the IP communications, telecom, VoIP, call center and CRM space, with plenty of opinion & analysis.]


A typical VAR is used to frequently selling large ticket items which may not all have the largest margins but in volume can throw off a good amount of cash and profit. As a result, many resellers have developed a business model with commensurate expenses and as the market shifts to cloud-based services with OPEX (News - Alert) budgets being used instead of CAPEX, customers are reducing their immediate spend and spreading their dollars over months if not years.

And the typical VAR is not ready for the shift. This is what was discussed in a recent conversation at TMC (News - Alert) headquarters in Norwalk, CT with George Fandos, Vice President of Global Data Center for Westcon Group.

In a conversation, I learned this $3.5B distributor has tremendous insight into how VARs need to prepare themselves for the future. Moreover, I had a chance to learn how the company has become a large distributor of Cisco (News - Alert) products via their Comstor division and they not only distribute but use and are fans of Cisco UCS solutions as they are faster to configure and reduce the need for cabling in a data center.

The company is focusing on the flattening of the network, virtualization and cloud-based solutions. Their experience in the virtualization market suggests corporations should have a game plan for virtualization to eliminate the all-too-familiar "virtualization stall" where companies cease to virtualize as effectively as they could.


My video interview with Westcon's George Fandos

Moreover, in the cloud, the company is buying services in bulk and reselling them to their resellers and handling the backoffice and billing - just like they do with products.

Westcon is a specialty distributor and it was great to get their perspective on cloud computing, virtualization, storage and other important areas of the market. Fandos was optimistic about the future which is great news for tech and he says the opportunities for VARs who make it through will be great. Be sure to check out the video for tips on how to be a survivor.



Rich Tehrani is CEO of TMC. In addition, he is the Chairman of the world’s best-attended communications conference, INTERNET TELEPHONY Conference & EXPO (ITEXPO (News - Alert)). He is also the author of his own communications and technology blog.

Edited by Janice McDuffee