Distributors diversify to survive

Missing link: security distributors claim vendor pressure has forced them to diversify

As little as three years ago, niche distribution was still divided by technology focus ­ meaning a specialist distributor was either security, storage or voice-and-data-centric.

In the security space there were the stalwart niche players, such as e92plus, Computerlinks, Noxs and Wick Hill, to name a handful.

But all these players have since expanded their focus, be it through acquisition (Noxs was acquired by Westcon), or through embracing networking products in their portfolio. Computerlinks was first, followed by Wick Hill and e92plus. This was at the same time that other distributors began expanding their security offerings and setting up specialist divisions to focus on the sector.

So, can a distributor really remain niche and still compete in today’s demanding marketplace? Or do they have to expand to survive?

Ian Kilpatrick, managing director of Wick Hill Group, said: “Our drift out is only into areas that are still associated with security. It is not like we have given up the faith. Just because an offering is not security-specific does not mean it is not still delivering security elements.

“Our specialism at Wick Hill has always been infrastructure. There are a lot of players now that have branched out into other areas, maybe to shore up revenue holes, but what we are looking to provide is solutions that offer the complexity customers will pay for in the technology areas they need, while at the same time driving margin for both ourselves and our reseller partners through support and services.”

Mukesh Gupta, managing director of e92plus, said vendor pressure was also forcing distributors to look at other markets.

“We are sort of forced into doing this because of vendors’ greed to expand into other areas,” he said. “If we do not do it, they will sign up a distributor that can. Vendors need us to expand our reseller base and we need to get more breadth, so the question is: how do we attract these people? How do we find them? The answer is by looking at different products outside the security space.

“Saying that, security is part of the network anyway. The bulk of our products will still be security and we still want to stay niche, but the lines will begin to get blurred.”

Limited choice

Bernie Dodwell, EMEA channel director of Sipera Systems, said there was little choice for channel players.

“Whereas in the early ’90s there were point solutions from small companies for specific protection, now all the major manufacturers incorporate security into their networking or application architecture. This means their traditional channel now has to embrace security as part of the overall solution.”

Ash Patel, managing director of Stonesoft, welcomed the change.

“As a vendor we see it as a positive step for the channel as a whole,” he said. “One of our distributors, Cohort, is strong in both the voice over IP market as well as security, and that enables our products to be sold to a wider customer base. It has enabled us to enter new markets.”

Mark Wheeler, general manager of Cisco business at Azlan, felt that change could not be stopped.

“It was inevitable that security would become integral to core solutions,” he said. “Whether you are a reseller, a distributor or a vendor, if you offer networking, servers or storage today, you need to provide good security as part of your value proposition.”

Caroline Hodson, channel sales director at Trend Micro, agreed. “Customers are looking for resellers to become more ‘trusted advisors’ rather than simply box providers, and resellers are looking to sell more services to increase margin and profitability,” she said.

“To fulfil this role, they have to be able to offer more than one solution range or the customer will go elsewhere. The distributor is at the end of this chain and it has had to diversify to provide the right service to resellers.”

Peter McEvoy, corporate marketing manager at Computerlinks, said: “Distribution has to evolve to meet the changing needs of customers. As a company’s network, perimeter and security all become more intertwined, the channel needs to take a more holistic approach.

“Value-added distribution has to adapt, not only to survive but more importantly to prosper in a highly competitive environment.

Pros and cons

Ed Callacher, security division director of Bell Micro, echoed this view: “Vendors are increasingly leaning towards multi-play distributors as they see the benefits of dealing with a distributor that is involved in several markets and can therefore increase a specialist vendor’s exposure in a new and diverse market space.”

But Alex Teh, commercial director at Vigil Software, defended specialist distribution. “The main advantage to having a pure play distributor focused on one market, such as security, is that they can be seen as a single centre of excellence for the channel and the vendor,” he said.

It seems inevitable that security distributors will continue to broaden their focus to keep both vendors and resellers happy. How long it will be before the niche players completely disappear remains to be seen.