Mention the name BT to the average person and most of them will have had an axe to grind over their home phone bill at some point or another.

However, the telco giant is working hard to win mindshare and shed its traditional image of being a phone and phone-line supplier, hence its

purchase of e-tailer dabs.com for about £30m last month (CRN, 1 May).

The firm claimed that the acquisition will help it strengthen its online sales and service capabilities and push deeper into the SME space.

Adam Liversage, a BT representative, told CRN last week: “We are a very different company to that which we were four or five years ago. Networking and IT services now account for more than one third of our revenue. We are not just about telephones and lines anymore; we are more than that.”

Many in the channel will remember BT’s last foray into reselling – BT-backed VAR Open Orchard was launched to sell business software packages such as CRM, ERP, web

trading and general accounting applications (CRN, 25 November 2002). This prompted widespread criticism and outrage from resellers who saw it as direct competition and a threat to their business.

But the Open Orchard venture failed less than a year later, and was folded back into parent company BT Retail after BT admitted its partners could do a better job (CRN, 13 October 2003).

Two-and-a-half years later, BT is a different company. It is under new management, and has claimed to have learned its lessons. The firm has been busy buying UK resellers over the past year: it snapped up SkyNet last May, followed swiftly by TNS six months later (CRN, 7 November). Now Dabs has joined the BT family.

Liversage said that it will very much be business as usual for Dabs.

“We have no plans to radically change anything about Dabs or the products that it offers in the IT space,” he said. “Dabs will operate as a standalone unit from BT for now – it is not about to be absorbed. We will
also keep the brand for the time being. All Dabs customers will continue to receive the service they have come to expect.”

He claimed customers will notice an improvement in service.

“The strength of the acquisition from BT’s point of view is that we offer a raft of networking and IT services products at all levels – from SMEs down to individual IT users,” he said. “We intend to build on Dabs’ excellent relationship with customers and SMEs.”

Liversage said BT prides itself on the quality of service it delivers to customers.

“We stake our reputation in the networking and IT services field and we have signed contracts with a raft of government and corporate names,” he said. “For example, we have deals with the NHS and HM Revenue and Customs, and in the corporate sphere we deal with all sorts of companies from high street names to fashion, retail and engineering. They all trust us to deliver and many have re-signed contracts with us.”

He admitted that the firm has some work to do around gaining customer and reseller trust in some sectors, but said it fully intends to continue working with partners.

“We are serious about the channel,” he said. “It is not all about acquisition for us. It is to create new revenue streams and market opportunities. We prefer to work with other channel partners as well.

“When you look at the acquisitions we have made such as SkyNet, TNS and Dabs, although they are all slightly different they do admittedly compete with the channel.

However, Liversage said BT still values relationships that it has with its channel partners. “We don’t harbour any ambition to own the channel,” he said. “It is an enormous market and we can’t own all of it.”

Despite those promises, Liversage added BT will always “look at opportunities that arise”.

And despite BT’s claims it has learned its lessons, old perceptions can be hard to shake off. The general feeling among channel players and market watchers is that BT must play to Dabs’ considerable strength and brand name in the marketplace, and not be too heavy handed with the use of the BT logo and its corporate branding.

Alastair Edwards, senior analyst at Canalys, said: “BT has traditionally been seen as monolithic and monopolistic, and Dabs is a highly entrepreneurial and flexible company. It is very competitive and will definitely benefit from the purchasing power of BT.

“However, there are two brand perceptions in the market. Dabs as a brand has a lot of loyalty, whereas BT has the image of being a corporate giant. It will be interesting to see how committed BT will be to using Dabs to push into the SME space and I think BT has to keep the Dabs brand going.”

Mark Watkinson, head of marketing at security vendor Panda Software, thinks BT could have a potential success on its hands.

“If BT does things properly then this could definitely work,” he said. “BT has all the resources, except the market experience in Dabs’ area. It is an exciting time for Dabs and BT, although BT doesn’t have a retail prowess. If I were BT I would look towards the experts in how to ensure the online market is adapted smoothly for Dabs’ changeover to BT.”

One source close to the company said the integration of the two would be a challenge.

“The two cultures are very different, so seeing how they intermingle will be interesting,” the source said. “Dabs is entrepreneurially led, while BT is very corporate driven. Mixing the two could prove tricky.”

Shaune Parsons, managing director of VAR Computer World Wales agrees that BT should hang onto the Dabs brand.

“I certainly wouldn’t buy BT services off the web, and I think it will be difficult for BT to integrate its own products and services into Dabs,” he said. “BT would be mad to lose the Dabs brand, unless it’s done very slowly over a period of time. Dabs is just such a strong brand.”

One reseller, who asked to remain anonymous, said BT should concentrate on retaining Dabs’ staff.

“Quick integration is OK, but the problem here will be personnel because they are the key strengths of the business,” the reseller said. “BT doesn’t have that knowledge of the market that Dabs does, and this will slow Dabs down [if staff start to leave]. It’s critical to maintain the Dabs brand in the short term, but I think eventually the name will struggle.”

Clive Longbottom, service director at analyst firm Quocirca, agreed BT has a challenge ahead.

“Dabs is essentially a prosumer shop and used to be aimed at individuals and firms that knew what they wanted to buy,” he said. “BT knows how to deal with the big guys and selling high-volume, low-margin products, but in Dabs they have a low-volume, high-margin offering as well. If BT tries to go in with the same approach as it does with big businesses, Dabs could face challenges.

“BT needs to use Dabs’ strength and then bring in some of its own strengths on top. Success really does depend on how BT plays it. If BT begins changing the branding to its corporate logo, I don’t think it will have much chance. It needs to keep the site simple so it is easy for customers to navigate, and it lays out exactly what it is they are looking for such as voice/data and wireless or voice over IP,” he added.

Longbottom said BT is definitely better positioned to make a go of Dabs after suffering past mistakes with its shops and the well-documented Open Orchard debacle.

“At the time BT wasn’t sensible about it and was arrogant,” he said. “But now it is under new management. It is definitely more sensible, but I do wonder how arrogant it still is.”

Additional reporting by James Sherwood

Contacts:

Canalys (0118) 945 0173

www.canalys.com

Quocirca (01753) 754 838

www.quocirca.com