Crossing the channel for market gain
French vendor Alcatel has had a remarkable 12 months. Once dismissed as being content to rest on its home success, the firm has taken the lead in the telephony sector and unveiled plans to storm the UK. Trevor Treharne reports
Telephony vendor Alcatel has gained a reputation from some channel players as the French firm that banks on strong home-market revenues to form its EMEA backbone.
However, the most recent findings from research firm Canalys saw Alcatel leapfrogging rival Siemens to lead the EMEA enterprise telephony market in the second quarter of 2005.
At the time, Canalys said Alcatel had grown significantly in the 100-plus-line market segment thanks to its OmniPCX Enterprise.
The OmniPCX Enterprise had been doing particularly well in Germany, the Middle East, Africa, Spain and the UK, according to Canalys. Alcatel posted 5.9 per cent growth across EMEA, despite declining investment in communications infrastructure in France.
The latter point showed a significant shift for Alcatel. Plugging lost revenue in the French market with funds from business in Germany and the UK is no mean feat.
Matthew Ball, research analyst at Canalys, said: “Alcatel is doing well in EMEA and has had some success in the UK, which has traditionally been a weak market for it.”
Ball added that Alcatel is also increasing coverage at the lower end of the market, where it has established a focused two-tier model.
Keith Humphreys, managing consultant at EuroLAN, said: “Alcatel is doing really well. It has enhanced its partner programme and is well thought of. Alcatel plays in a few areas, but is doing particularity well in broadband deployment and Voice over IP [VoIP] too.”
Only this month Alcatel claimed it shipped more than 80 million digital subscriber lines (DSL) to customers worldwide in 2005. It was also confirmed as one of the preferred suppliers to BT’s next-generation network transformation programme, the 21st Century Network.
But where does the UK channel fit in the vendor’s plans? Are resellers getting a slice of Alcatel’s improving fortunes?
Speaking to CRN at the Alcatel Annual Forum in Paris last month, Paul Tebbutt, UK marketing director at Alcatel, said: “We have a clear mandate that Alcatel goes through the channel. We are 100 per cent indirect in the UK. We are growing in the UK, and we have some good channels, with a balanced mix.”
Tebbutt said the vendor has taken the fortunes of its channel into its own hands with more direct touch business leads, an increasingly common approach for vendors.
“The direct touch salesforce creates opportunities that can be fulfilled through the channel. Working with our channel enables us to target large accounts where VARs need support.
Keith Rapp, UK channel manager at Alcatel, said: “Alcatel was slow out of the starting blocks in January, but now we are seeing growth. Applications and convergence are the key drivers in the market, but there is still a period of education for our partners.”
Rapp also championed Alcatel’s direct-touch model, and said the vendor has realigned its channel set-up to assist reseller opportunities.
“We were not being proactive in developing new opportunities, but now we are feeding the leads to the channel. Government and health are where the direct touch team is seeing the most success,” he claimed.
Rapp said the direct touch model is now expected by end-users, with vendors offering consultancy and pre-sales support a standard practice in the voice space.
“We have invested heavily in reseller recruitment. We have 100 indirect partners in the UK. I would like to see another 10 strong resellers come on board this year,” Rapp added.
Nigel Jones, business development manager of Alcatel, said the recruitment will involve more diverse VARs to help the traditional voice partners.
“We want more ‘channel buddying’ to see resellers partner with each other. That side seems to be working quite well. The channel is shifting up a gear with the applications. They are asking customers what their pain points are and the channel is investing in new skills,” Jones said.
“We are introducing more application development partners to make products for our channel to take to customers.”
Alcatel is keen to build business out of its ‘safe’ French territory. Its direct-touch leads will encourage resellers, proving VARs see the fruits of Alcatel intended labours.
Jim Robertson, sales manager at MTV, noted a shift in reseller focus for Alcatel’s products.
“Alcatel has two main lines: the Alcatel OmniOffice and the Alcatel OmniPCX Enterprise. Our VAR channel has historically done well in the office side, but we are seeing a move towards the enterprise,” he said.
Robertson said the transition towards the enterprise is because of the rising skill levels of VARs that demand larger, more profitable projects.
Alcatel and its traditional voice heritage attempted to apply a converged focus to its channel after signing broadliner Northamber at the end of 2004.
David Hennell, commercial manager at Northamber, said: “We were brought in by Alcatel to get into the IT space as convergence gathers pace. Alcatel’s telephony side was already well serviced.
“The IT channel does not represent a significant part of the tele-
phony market yet, but it is going that way. Our IT resellers are looking at convergence and VoIP,” he said.
Hennell added that Alcatel and Northamber are working together to train IT resellers in VoIP, a major area of focus for Alcatel.
Alcatel’s voice play seems well developed in EMEA. Signing Northamber acknowledges the move towards convergence, a field that opens up a new area of competition, including developed networking rivals such as Cisco. There is still no truly dominant vendor in the convergence space. Alcatel will be hoping its strong voice side can become an overriding force in its favour.
Tom Perry, head of marketing at Alcatel reseller Freedom Communications, said: “Alcatel is our only vendor and we have stuck with it for the past 10 years. There has been increased IP acceptance across the board and things have been going well. The large enterprise and mid-market is also positive.”
Perry said Freedom has been adding vertical focus to its business and would like to see the same from Alcatel.
“I would like to see greater vertical focus from Alcatel, with specific marketing on verticals such as retail and health, where investment is still needed,” he said.
Perry added that the Alcatel direct touch has been creating opportunities, and the addition of application partners will help VARs such as Freedom expand in IP applications.
Jess Thompson-Hughes, managing director of distributor React Technologies, said: “Alcatel has a lot of customers that are loyal to it for the comfort factor. It is not that aggressive in the SME market, but it is doing well in the large corporate space.”
Thompson-Hughes supported Alcatel’s direct touch model, classing it as “the only way to do business these days”. Hewlett-Packard, Cisco and Siemens have similar programmes.
“In the phone systems space Alcatel competes with Avaya and Cisco. For wireless, it is Cisco and Aruba; and for switching it competes with Foundry and Extreme. It has a broad portfolio,” Thompson-Hughes added.
Rob Shervill, senior manager for channel strategy and support at rival vendor Nortel, said: “In terms of competition we are coming up against Avaya and Cisco, and Siemens and Panasonic in the lower end of the market. Alcatel has a fantastic market share in France, but I could not name three UK Alcatel VARs.”
Another source said: “Alcatel has very few sales people left. Customers should be asking how many people there are for the direct touch approach. Alcatel is strong in Germany and obviously France, but has little presence in the UK.”
Graeme Allan, vice-president of northern Europe at Alcatel Enterprise Solutions Division, said: “In 2005, Alcatel experienced significant double-digit growth in both our voice and data business. This was a direct result of a new direct touch investment. Our plan is to emulate this in 2006.
“We are continuing to expand our direct touch investment in UK and Ireland. We have added business development resource to broaden our routes to market, and our marketing investment is also growing significantly. Most recently, we re-organised our channel team to provide a much stronger focus on our premium channel partners, supporting their business strategy as well as their sales and marketing efforts in day-to-day transactional business.”
Alcatel seems to have a broad portfolio of offerings for a wide range of markets. Alcatel has not narrowed down its focus, nor has it expected it partners to do the same. Increased business outside of the French market is encouraging for Alcatel, while building a strong heritage in voice and broadband is a smart move for a vendor acknowledging the opportunity in VoIP and convergence.
The key relationship for Alcatel in the UK will be the Northamber distribution agreement. If Alcatel can get the IT resellers on board to match solid voice and broadband sales, then Alcatel can become a key player in the misty future of the convergence vendor market.
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Contacts:
Alcatel (0870) 241 7267
Freedom Communications (01923) 654321
MTV Telecom (01784) 740000
Northamber (0208) 296 7000