With the networking market in a state of almost perpetual change, resellers can be forgiven for their indecision with regards to the direction in which their loyalties and market strategies should lie. According to many in the channel, the latest spate of volatility and consolidation is breeding a great deal of confusion and uncertainty among resellers.
Graham Hardy, director of advanced technology at reseller Comparex Networks, believes the role of the channel is undergoing a subtle but rapid change as technologies evolve and converge. Resellers will have to work hard to keep pace if they are not to be left in the market's wake.
'The role of the traditional integrator will be dead within two years because of the convergence going on between vendors, telcos and ISPs, users and, in some cases, between the integrators themselves. Whereas the traditional network integrator focuses predominantly on hardware - plus a limited amount of software, usually for network management - this is insufficient for today's more highly demanding customers,' he says.
Hardy adds that the next generation of networking integrators/resellers are going to need a broader range of skills to survive. 'The successful integrator will have skills ranging from traditional networking services through to computer and telephony integration, private network integration, e-commerce, network management integration, desktop services and enterprise resource planning. Resellers will need a working knowledge of all these spheres.'
He also believes that the networking space is becoming much more cosmopolitan in its outlook. 'Integrators will have to demonstrate the ability to affect such a strategy across Europe and with a multinational sales team. Only with these skillsets in-house, will we be able to address the customer needs of today and, more importantly, those of tomorrow.'
Hardy is not alone in this opinion. In the changing networking world, resellers have to be integrators in every sense of the word, according to Howard Inns, marketing manager at network integrator Milgo Solutions.
He feels the very term 'reseller' may be a misnomer for those companies making the right noises in the networking market.
'The term reseller is a reflection of an organisation simply supplying the technology that is to be deployed to a particular user. But e-business systems and other business application level issues are all about how the individual elements of the network dovetail - how they integrate and work with each other. The Website, the network, the requisite security systems, ERP, logistics - system resellers will have to become integrators and will need a clear understanding of their capabilities and limitations if they are to fill their new role,' he says.
Inns is quick to stress, however, that resellers shouldn't necessarily try to become a jack of all trades. The market is far too complex a proposition for that. 'The next generation of integrators will need to know what they are good at. They will need to understand how to work with organisations that can offer specialisation in the delivery of the overall system. No single organisation will know enough about each specialist area to make the whole network fly. It is no longer a question of just understanding how the individual networking technologies work. Not every integrator can do this.'
Jon Davies, strategic marketing director with Logical Networks, believes this change in channel focus is a result of an accelerating shift in the networking market's power base. 'Ever since networking first became a business, it has largely been the vendors that have been responsible for steering its direction. But as customers start to give more credence to network integration and the launch of networked business applications instead of boxes and wires, the market has started to change,' he says.
It seems the market is being forced to give the customers what they really want rather than simply supplying what's on offer. For the reseller with the right expertise and the will to be an early adopter, the opportunity is clear. 'Everyone in the market - from vendor to Var - is having to go back to their drawing boards to refine their money-making strategies,' says Davies. He also believes the balance of power in networking is shifting rapidly towards the integrator.
'The rise in the revenue potential of services is unleashing a storm of change upon the industry. Product margins are falling while customer demand for integration and services is soaring. The way in which the vendors and the more traditional channel businesses respond to this will change the structure of the industry forever. The vendors won't be ousted from the market's driving seat. But while they are controlling the throttle of the industry, the service businesses, including those in the channel, now have control of the gears.'
Steven Shakel, project manager for systems integrator ECS, believes the level of activity in the sector will intensify still further and consolidation will be the inevitable outcome. 'With so many networking start-ups and the convergence of technologies such as voice and data, takeovers are rife - just look at how telecoms companies such as Alcatel are moving in on companies such as Xylan.'
However, not all small to medium sized networking companies will be swallowed up. There are just too many of them and, according to Shakel, this is causing some significant problems of its own. 'There will be a number of companies and technologies out there that risk falling by the wayside and that's leading to further confusion among corporate buyers and resellers.
A smaller company may be offering better quality and more cost-effective products, but can their technology be future-proofed? More often than not, it seems, a lesser known brand can mean a higher long-term risk, no matter how high the initial quality of the product.'
In addition to the market's long-term structure, the shift in focus towards services is having a big impact on networking products, too - on the direction in which the products are evolving, on their marketing and, most importantly, on their routes to market. Hardy says the convergence of networking, communications and the internet will have an influence on the shape of the market during the course of the next year. He believes the key networking technologies for the next 12 months will be the ongoing integration of voice and data and unified messaging technologies.
Peter Warrington, technical services product manager at Lynx Technology, agrees, but with some reservations: 'I think the convergence of voice and data is going to happen, but whether this will be just as a backbone Wan network or whether it is delivered straight to the desktop in volume is down to the ability of the vendors to agree on open standards for communications services.' Until this is resolved there will continue to be a certain amount of confusion in the channel.
Warrington insists that a number of issues will have to be tackled and resolved if the convergence between voice and data technologies is to be fully successful and accepted by the market. Functionality is of particular importance, he says. 'If convergence is to take place right up to and including deployment to the desktop, the current lack of comprehensive agreements in the standards bodies will need to be overcome. Without basic telephony features, customers will be reluctant to switch to a voice over IP-based network, despite a strong cost justification argument. Core connectivity alone over IP is not a sufficient justification for volume replacement when user productivity and redundancy issues are taken into account.'
He believes convergence won't happen on the desktop right away, but that single voice and data networks will continue to grow as backbone applications, where overall capacity generates the cost benefits needed. This suggests it may be some time before voice and data-carrying networks will gain universal acceptance and adoption in the wider market. In the meantime, resellers will have to continue to support incumbent products and services while trying to develop the skills and markets for emerging technologies.
While the market is waiting for voice to become a significant differentiator and a key factor in the purchasing decision, there are several areas of existing opportunity that can be taken advantage of, according to some resellers. Derek Watkins, managing director of infrastructure management supplier Peregrine Systems, says there is still a very real opportunity for dealers to exploit the current lack of in-depth networking knowledge among users.
'The huge growth in networking equipment seems to have caught some companies out and many are struggling to manage their networking infrastructures efficiently. There are plenty of good tools available for the management of the network's communications, but these don't address the problem of where equipment is located and who manages and supports it.'
He adds: 'Sooner or later, companies need to get a handle on the finer points of their network's infrastructure, but few user companies currently have a comprehensive knowledge base in that area. The door is open for resellers to capitalise on this situation, through supplying both infrastructure management tools and expertise, and by providing the services to back them up.'
What resellers must not do though, warns Inns, is get stuck with legacy product. Securing success in this sector is all about reacting early and making a decision.
'Only those organisations that are innovating now will stand any kind of chance when the mass internet-driven market explodes,' he adds. 'Those that react after this market opens up will find it extremely difficult catch up. This means getting the network infrastructure and relationships with the telcos right, and getting them right now.'
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