A is for A-List

It was the second year of CRN’s guide to the channel’s movers and shakers, as we launched CRN A-List 2006, the definitive guide to the personalities, lives and careers of the UK channel’s elite. Have you made it into the best of the best yet? If not, don’t fret because we will be reviewing the list later this year – and every year – so if you think you should be on it, fill in the online form at: http://www.channelweb.co.uk/alist/ and convince us.

B is for Big Blue re-invents services as products

Just as we got our heads around dropping products and selling services instead, IBM confused us all again by re-inventing services as products. Big Blue introduced what it called “the world’s first service products, services that can be purchased, implemented and run in the same way as hardware or software.” Do make up your minds.

C is for Convergence

“The convergence message really picked up momentum this year,” said David Ellis, director of e-security and professional services at distributor Computerlinks.

Phil Purssey, sales director at BT Business’s Indirect Channel, agreed. “Service providers have come under significant pressure to evolve, and one of the big questions is how successfully the industry is weathering these changes,” he said. “We still have a lot of work to do. Certainly, the market no longer looks like it did two years ago. Meeting the demand for convergence has transported progressive traditional voice dealers into the network space, opening up a raft of new revenue opportunities in areas such as storage and video conferencing.

“We are also seeing data specialists add voice to their repertoires,” he added. “Traditional voice players are making a fantastic go of convergence, but only because they are investing time and financial resources in adapting their businesses and skill-sets. The opportunities are not restricted to either camp, but they require resellers to evolve their business models.”

... and for the CRN Channel Awards

Last year’s awards – the 13th and most successful to date – were again held at London’s Battersea Park Arena and once again broke all the previous records for entries, votes and guests. Well done to all our winners and thanks to all of you who attended.

D is for Dual-core processing

Dual-core finally managed to make a serious breakthrough into the server space, as the ongoing dual-core performance war between Intel and AMD continued to rage. With the battle swinging both ways, Intel finally took the upper hand – and by quite a margin – with the launch of its new Core 2 Duo processor set. More powerful but also less energy hungry, the Core 2 Duo processors are cheaper and cooler to run, which helped tip the balance Intel’s way... for a while anyway.

… and Distribution

While the sector still struggled with low margin and commoditisation, some believe that 2006 wasn’t all bad.

Andrew Binding, managing director of the UK arm of distributor Magirus, said: “Two years ago, people were sounding the death knell for distribution with dwindling margins, but from our perspective 2006 proved the complete opposite. We saw record growth in UK revenues as a result of our consultative approach to our partners. This is all about providing a combination of consultancy from business development to technical and market knowledge, helping VARs better support customers. Ultimately, this approach builds growth for all involved, whether for partners’ existing or new business areas.”

E is for the E-commerce renaissance

Fuelled by broadband’s growing ubiquity, e-commerce accelerated its comeback. Conservative estimates suggested that about 10 per cent of the UK’s 2006 Christmas shopping was done online, while numerous reports emerged of the high street being substantially quieter than usual.

With confidence and online services on the up, will the fortunes of the resellers providing them take a similar path? Many, such as Ariel Ludi, chief executive of e-commerce vendor Hybris, believed this to be so.

“Many new technologies are coming on-stream, the convergence of which will see a massive drive for e-commerce in 2007, with new types of e-commerce emerging,” he said.

F is for Free broadband

The connectivity war continued to escalate with the battle raging on several fronts, including broadband, telephony and home networking, with a loss-leading ‘free’ 8MB broadband telephony bundle from Carphone Warehouse quickly followed by rival offers from firms such as Orange, Tiscali and Sky.

John Carter, managing director of BT distributor DMSL, said VARs are starting to make hay by selling additional services around Asymmetric Digital Subscriber Line and other high-speed connections.

“Broadband take-up among small businesses and consumers was earth-shattering in 2006,” he said. “This year will see people making much more use of all that bandwidth and investing in online value-added services.”

Andrew Dickinson, sales and marketing director at ISP Griffin Internet, which provides white-label broadband and hosting solutions to the channel, said that while resellers started to understand the reality of convergence in 2006, last year also saw a shift.

“As speeds and reliability increased, xDSL started to move from the periphery of the reseller’s portfolio into a more central, strategic role,” he said. “And moves by major telcos to disenfranchise indirect partners to cut their commissions.”

G is for Green is IT’s new black

The ‘green’ agenda gathered huge momentum throughout 2006, becoming an unlikely source of income for the savvy reseller. Virtualisation was a particular opportunity, according to Tom Kelly, managing director of VAR Logicalis UK.

“While the majority of businesses are keen to be seen as green, they have rarely thought through the budgetary implications,” he said. “Resellers that are serious about developing green IT revenue streams must first take the time to understand where and how each company consumes its energy. Helping beleaguered IT managers to understand their IT status quo and how to make improvements can make the difference between winning the business and becoming just another close second.”

Kelly believed that presence-enabling technologies was another hot prospect for 2007, and another great opportunity for the channel.

“Again, the benefit for business – and by extension the opportunity for resellers – is that it [presence-enabling technologies] combines environmental and business advantages in one investment,” he said. “This makes it an easier sell for vendors and an easier cost to justify to the board.”

H is for HP’s travails

Hewlett-Packard (HP) had a rather eventful 2006. There was the ‘spying’ scandal that saw the company say ‘goodbye’ to three board members, two lawyers, millions in costs, and then say ‘hello’ to some interesting press. Then came a $4.5m cash injection for its software reseller channel as it sought to clarify its strategy, which was in turn followed by a range of channel shake-ups. Here’s to a less eventful 2007 for HP.

I is for Internet Protocol

There was an ever-greater acceleration in the profile, reach and prevalence of IP in 2006 as it continued its seemingly unstoppable march towards total dominance and gained greater user and channel traction in just about every sector. Expect more of the same in 2007.

J is for Joining forces

BT and Nortel; Google and YouTube; Alcatel and Lucent; RSA and EMC; Virgin Mobile and NTL:Telewest; Hewlett-Packard and Mercury; Brocade and McData; AMD and ATI; AT&T and Bell South... And so the list went on. If nothing else, 2006 was the year of the tech merger, acquisition and alliance.

K is for Kumar and other stories

What a 12 months for the Security and Exchange Commission’s enforcers. And how the mighty have fallen as a result. Even as chief executives everywhere began to realise the full horror of legislation such as Sarbanes-Oxley, disgraced former WorldCom chief executive Bernie Ebbers was starting his 25-year prison sentence. In February, Sanjay Kumar, erstwhile Computer Associates (CA) chief executive, began the 12-year sentence he received for his part in CA’s ‘35-day month’ accounting scandal.

L is for LCD

LCD technology continued to dominate the display market, but with prices set to slide through 2007, more market volatility looks likely.

M is for Managed Services and Mobility

Managed services grew in popularity among both end-users and providers, according to John Severs, chief technology officer at 7global.

“It became a competitive market, with providers trying to move up or down the food chain,” he said. “There were rack-space providers looking to offer managed services, application hosting specialists attempting to ‘unbundle’ fully managed services into specific service offerings, and network service providers looking to add value with hosting and managed services.”

Mobility was another area of progression, according to Computerlinks’ Ellis.  “Helped by the convergence story, security vendors stepped up to the mark with solutions, and the desire for greater mobility and 24-hour access to voice and data,” he said. “These two areas alone opened up opportunities for the channel to extend their vendor portfolios and sell into new markets.”

N is for New dates and a new-look Channel Expo

Channel Expo, the UK’s number one channel event and only channel-specialist exhibition, celebrates its 10th birthday in 2007. This is a significant milestone given the fate of its US cousin, Comdex.

Combining the Computer Trade Show, Comms Channel Expo, the Technology Retail Show and Office Technology, there is a new look and feel, with the show having been fully revamped and restructured to ensure maximum coverage and value for both exhibitors and attendees.

The show has also got new dates. Instead of its customary May slot, it will now be on 28-29 March, whichcoincides with the end of CeBit on 21 March, allowing US and Far Eastern visitors to maximise their time in Europe and attend both shows.

O is for Optimisation (WAN)

With convergence a recurring theme, WAN optimisation also came to the fore in 2006, according to Antoine Guy, marketing director EMEA at Allot Communications, with several catalysts catapulting it to the frontline for resellers, who began recognising the worth of traffic management as a value add.

“Suddenly, telecom and portal operators and application developers realised the internet wasn’t a finite resource,” he said. “Particularly in the light of new bandwidth-hungry applications such as voice over IP and IPTV. The idea of controlling capacity caught on quickly, leading enterprises to look at how they could monitor, rate and prioritise specific applications or traffic flows.”

The rise of the ‘intelligent network’, with its ability to turn dumb IP pipes into a discriminating conduit was also important, Guy added, as was the rise of new networking technologies such as IP Multimedia Systems.

P is for Public-sector growth

Toby Strauss, executive chairman of OrderWork, a 2006 start-up that trades in IT skills online and also powers and manages Microsoft’s SkillsFinder, said 2006 was a particularly key period for technology in the public sector.

“There was huge growth in IT spending in the public sector, driven by the government’s gateway agenda and by a desire for improved efficiency in areas such as the NHS,” he said. “Public-sector spending will continue to be a significant part of IT spending in coming years, but perhaps not at the levels of growth seen in 2006, particularly with the NHS project.”

R is for channel Revamps

If 2006 was not a record 12 months for channel programme ‘revamps’, it certainly felt like it: Intel, Cisco, Actinic, Fujitsu Siemens, AMD, Iomega, RSA Security, ScriptLogic, Novell and Nortel were all among those that announcing revised, rejuvenated and otherwise reworked channel partner initiatives.

RSA Security’s improved SecurWorld Partner Programme included a Visa cash card that offers resellers cash rebates on sales and could be used like a normal debit card. Nortel simplified its partner strategy by reducing its enterprise service offerings from 700 to 70, while Intel seemed to divide its channel with the decision to unify things under a single global umbrella.

S is for Security

Nick Garlick, managing director of specialist IT security reseller Nebulas Security said that 2006 will be remembered as a period of consolidation, during which time major vendors expanded their portfolios through acquisition rather than by developing their own solutions and services. Notable among these were EMC’s purchases of RSA Security and Network Intelligence, and Secure Computing’s acquisition of CipherTrust.

Garlick worried about what such “rampant consolidation” will mean for independent resellers and vendors over the coming year.

“I’m concerned there will no longer be room for highly specialised, expert, customer-focused organisations,” he said. “Customers may find that solutions are costing more because someone has to pay for all the acquisitions.”

According to Phil Keeling, regional director UK and Ireland at Fortinet, 2006 saw far more vendors talking up their abilities to provide rudimentary Unified Threat Management solutions. He said the hardest thing for resellers was to try to work their way through this minefield of vendors all appearing to offer the same solutions.

Last year was also very encouraging in terms of high-end market growth, however.“We are definitely seeing a sea change in terms of the amount of chassis-based solutions we are selling compared with mid and lower-end appliances as in previous years,” Keeling said. “More and more of our channel partners are, like us, focused on the high-end.”

T is for Transitional

Several commentators spoke of 2006 as a time of flux, especially in areas such as service and storage.

Many found the transition to services tough and therefore chose to merge or sell, according to OrderWork’s Strauss. Firms taking advantage of this included Phoenix IT and Azzurri, which are focusing on services and defined niches.

Chris James, marketing director EMEA at Overland Storage, said that in storage, the vast number of mergers and acquisitions was both one of the best and worst things about 2006.

“Quantum acquired ADIC, Sun acquired StorageTek, Brocade acquired McData and EMC acquired pretty much everyone else,” he said. “For the channel, this meant the range of suppliers and products available was reduced dramatically, limiting the variety of products available and the number of vendors that resellers can go to for a competitive quote.”

He added that these mergers left doubt over what products will stay and what will go when product lines are consolidated, so VARs and end-users may be left with discontinued products, for which there is limited support.

U is for Uncertainty for Microsoft’s broadliners

October saw Microsoft end weeks of speculation and a nervous wait for its channel by finally naming its line-up of authorised distributors. Then, in virtually the same breath, it threw its three incumbent broadline distribution partners – Ingram, Computer 2000 and Bell Microproducts – into a panic by announcing it would be dropping one of them at the beginning of the second quarter this year. The wait goes on.

V is for VoIP continuing to mature

“In 2006 the market for VoIP [voice over IP] matured, with many public and private-sector organisations moving to IP communications”, said Andy Elliot, EMEA marketing manager at Mitel. “Companies started to realise that they don’t have to replace existing telephony systems to benefit from IP communications and that they could adopt a seamless migration process, building on existing infrastructures to make the transition to IP more financially viable.”

Elliot added that in 2007, more organisations will recognise that IP’s real value is in applications to improve customer services and business processes, such as unified communications and business continuity.

“This, together with application vendors driving more widespread awareness of IP-driven unified communications will make 2007 an exciting year for channels,” he said. “The challenge will be having the portfolio and service skills to integrate the IP voice, network and application elements.”

W is for Windows Vista

Launched late, and still not launched to consumers, Windows Vista had the usual Microsoft marketing muscle behind it. It is too early to say what take-up will be like.

X is for X chairman of Microsoft

Everyone’s favourite chairman, founder, chief software architect and bottle-washer, Bill Gates, is off, according to Microsoft. Apparently he is stepping down to work on his canonisation by putting his billions to work in the developing world.

Y is for Ying and Yang: positives and negatives

Last year was a very mixed bag, according to Gary Fowle, marketing director at Fujitsu Siemens Computers.

“2006 was a good year overall, but also a tough one,” he said. “There was some unit sales growth, but the market overall was pretty flat and average unit prices continued to fall. There were new challenges to meet, such as the RoHS [Restriction of Hazardous Substances] directive and, at times, the industry had some inventory issues. It is important they are not repeated in 2007, because now that Windows Vista has arrived, there is a massive upgrade opportunity.

“On the positive side, we saw strong growth in mobile and the arrival of embedded 3G, which added even more momentum to the market and gave resellers something of real additional value. We also saw some colossal growth in data-centre opportunities that will be a big opportunity in 2007.”

Z is for Zzzzzzz.

And all those ‘announcements’ that sent us to sleep. They are far too numerous to list and too embarrassing to name, but you all know who you are.

>> Further reading:

The key technology areas for 2007

Contacts:

Allot Communications (01234) 834 762

www.allot.com

BT Business Indirect Channel

www.bt.com/btbusiness

Computerlinks (01638) 569 600

www.computerlinks.co.uk

DMSL (0870) 607 2777

www.dmsluk.co.uk

Fortinet (0870) 735 3666

www.fortinet.co.uk

Fujitsu Siemens Computers (0906) 863 341

www.fujitsu-siemens.com

Griffin Internet (0870) 804 0804

www.griffin.com

Hybris (01908) 487 515

www.hybris.com

Logicalis UK (01753) 777 200

www.logicalis.co.uk

Mitel (01291) 430 000

www.mitel.co.uk

Nebulas Security (020) 7654 0080

www.nebulassecurity.com

Overland Storage (01189) 898 000

www.overlandstorage.com