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Major trends for the IT & Telecom Channel

Tuesday, January 26th 2016

Part 1/4: CONCENTRATION AND GRANULATION


Major trends for the IT & Telecom Channel
 
If you take a good look at the channel you may very quickly develop a squint as the sector is carried by opposing currents.

In hardware resale, the drop in margin and the development of virtualization of IT infrastructures is pushing the various players to either leave resale activities to focus on services, or to merge to gain critical size.

Still, the development of virtualization is creating a lot of new opportunities and businesses that require agility and speed. Usually the small and extremely focused entities have a better chance of being successful, or of being rapidly absorbed by a bigger fish.

So today is not a period where companies are quietly developing their business, it’s a period of strategists betting on the right horse and never forgetting the culture and history of their own enterprise.

The consequence for those who want to have their product sold by intermediaries is a world where just understanding the business of those you are speaking with is a challenge in itself.  Further difficulties come from the fact that business is done on quite a small scale and is often not strategic. The Pareto law is now closer to 90 / 10 than 80 / 20. Apart from certain exceptions, those who are still looking for golden nugget accounts hidden off the radar are just wasting a lot of time. In our business any concentration is always balanced by new companies positioning themselves on emerging technology or models. The challenge for the big players is now how to manage this change with teams that have shrunk a lot in the past 5 years.  How can distributors or VADs help in this, and are they even willing or able to do so? Distribution opportunities are numerous, but never in the history of the IT industry have the margins for those who do it been so low….Perhaps manufacturers think that the ultimate channel is Amazon.

Read part 2 : Hardware concentration
Jack Mandard

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