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October 09, 2012

Channel Business Changing with Cloud, Web

The IT channel partner business is not identical with the telecommunications services channel partner business, but both now show some signs of disruption and change that are similar. The shift to a “software and services” business model and consolidation are examples.

Consolidation is presently, and historically always has been, a feature of the communications business. That might also be said of the information technology business as well, and the underlying market dynamics are similar in many ways.

Without a doubt, a consolidation wave now is happening in the information technology distribution space, says Canalys CEO Steve Brazier. That mirrors the ongoing consolidation of most segments of the telecommunications business as well. 

Image via Shutterstock

Brazier points out that distributor Avnet bought Magirus, Tech Data (News - Alert) acquired SDG and Brightstar, and Ingram Micro has bought Brightpoint. Some might argue that actually is good for the IT channel partner business, to the extent that the mergers create a smaller number of financially stable wholesale partners.

But a more important aspect of change in the IT distributor business might be the shift from “hardware sales” and “break and fix” to software products and services. In the communications business, the parallel trend is the shift from “access” to “applications.”

"That is where the growth is coming from," said Brazier. That has a number of implications for channel partners, he suggests. The shift to a business model built on enterprise applications often requires the ability to tweak and customize generic apps for various customers and industry verticals.

In fact, IT resellers should recruit developers to build such apps, says Brazier. In the past, it has made more sense to recruit highly-skilled technicians able to go to a customer site and fix problems. These days, it is more important to support Web apps and services, Brazier says.

“So apps are replacing people," says Brazier. In other words, you might argue, the key customer IT issues and solutions now revolve around web-accessible apps.

That is not to say that “cloud computing” has yet proven to be a big revenue producer for channel partners, though. The cloud market, despite the best efforts of marketers to hype its importance, "continues to disappoint in revenues and profits," said Brazier.

In a market where most enterprise or consumer apps are housed “in the cloud” and delivered using a standard Web browser and broadband access connection, both IT and telecom channel partner businesses will change. To note just one aspect, it increasingly will be possible to discover and then use apps totally or substantially using only Web mechanisms.

Edited by Brooke Neuman

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