"Channel partners are doing well and, perhaps more importantly, the European economy is looking better than it has done in the last 10 years."
CEO Steve Brazier's optimistic start to his welcome speech at the EMEA Canalys Channels Forum in Venice paints over what has been for many channel partners an eventful and perhaps tumultuous 12 months.
Casting our minds back to Canalys' conference last year in Barcelona, Dell had just completed its $67bn (£51bn) merger with EMC, HPE had announced its intention to sell off its $8.8bn software business to Micro Focus only a month before, around the same time as Tech Data announced it $2.6bn buyout of Avnet TS.
The channel certainly had a lot to digest at last year's conference. And there was no doubt that partners had a stream of pressing questions - and uncertainties - for their vendors and distributors to answer.
But with a new location this year, leaving behind the beaches of Barcelona for the endless canals of Italy's famous floating metropolis, has the channel also left behind its uncertainties and insecurities after an industry-altering year of developments?
"There are more opportunities for the channel now than there have ever been and we see a very bright future," insisted Brazier.
He claimed that EMEA channel partners are set to grow by five per cent on average per annum for the next few years, adding that in the first half of 2017, distributors grew four to five per cent over the first six months of 2016.
Brazier ended his keynote with a series of predictions, one of which forecast this quarter - Q3 of 2017 - to be the best growth quarter for the technology industry in western Europe in a decade.
Brazier cited a bounce-back in the PC market, which finished 2016 with its sixth consecutive year of decline but began to stabilise this year, thanks to strong notebook sales.
Perhaps the main takeaway for partners from Brazier's keynote was his insistence that partners should not give up their hardware and infrastructure business units, telling a packed room of channel delegates not to listen to investors urging them to exit the hardware game in favour of pushing services.
"Many of you are benefiting from Windows 10 refresh cycles. The price of PCs has gone up, and your margins have gone up too. Whoever told you selling hardware was dead was completely wrong. The PC has actually become a profitable part of your business once again," he said.
"About five years ago the storage companies were the kings of the technology industry… they thought they were special, but suddenly storage has been commoditised and the storage guys are going to PC companies saying ‘please can I have a job'."
Speaking to CRN at the event, Steinar Sønsteby, chief executive of Nordic systems integrator Atea, praised Brazier's opening keynote.
"I thought he nailed it," he said. "He was really precise on a lot of things, on how you can't make money on hardware, how the channel is having to transform itself. All these things are what a lot of people say, but they are not really true."
Sønsteby agreed with Brazier's notion that the channel does not need to "reinvent" itself, and warned of the dangers of taking a new proposition to new customers.
"It is a myth that you can't make money on hardware. Still today we make most of our money on hardware. It's dangerous to think you need to disrupt yourself every second year. There is still a lot of money to be made in the channel selling traditional product; you just have to add more value. You don't have to abandon it," he said.
"As most of us know, it is easier to go to known people who trust you, and have for a long time, and sell something you know instead of trying to sell something new to someone new.
"If you go with something you are not known to do, to someone you don't know, it is difficult. A lot of people try to do that and they are not successful."
General director of SCC France Didier Lejeune also said that while SCC's French business has been recently exploring new services, he made the decision to keep investing in hardware, which has paid off.
"I built a strategic business plan in 2013 for three years, and one of the key decisions was not to abandon hardware. It is our DNA. We are not a pure services company, and we have core assets in supply chain management, life cycle management, renting, disposal services, which gives us a unique position," he said.
"The big services businesses are all French firms - Atos, Capgemini, Sopra Steria. All these companies have abandoned the managed services around users. That is why we think we have a good position on that."
Is the channel all in with Dell EMC?
While Brazier's prediction that Microsoft will exit its Surface business by 2019 sent the largest ripples of interest through the audience during the first keynote session of the event, Dell EMC's keynote, taken by CCO Marius Haas, also proved a big talking point for partners in attendance.
The executive used his keynote to reel off all the technology divisions in which Dell EMC claims to hold the number one spot.
"Dell EMC, number one in the datacentre - storage, networking, server ecosystem and hyperconverged devices - and number one in native cloud applications and development platform. And RSA [and] Secureworks, number one in securing the environment," he said.
"[Dell is a] $74bn enterprise, and at our current course and speed, we will surpass $80bn this year… [we are] $35bn in the channel; at the current course and speed this year we will surpass $40bn with you."
Haas called attention to last year's Canalys event when Michael Dell gave a keynote and was asked which he valued more, Dell's direct pedigree, or the channel.
"He said the channel," reflected Haas. "The rates and capabilities of our partners are enormous. We clearly understand the value of that reach, and that capability."
When quizzed by Brazier during Haas' keynote Q&A, the CCO revealed that he expected Dell's indirect sales to generate more than 60 per cent of revenues by 2020.
Speaking to CRN sister site Channelnomics Europe earlier this year, global channel chief John Byrne said that channel partners and distributors are "all in" with Dell EMC, and are hastily looking to improve their standing with the vendor.
Alberto Roseo, general manager of €177m-turnover SI Lutech, said that his firm intends to step up its investment in Dell EMC and has been encouraged by the vendor giant's channel commitment since it launched its inaugural partner programme in February.
"We are pushing on moving more and more and consolidating our partnership with Dell EMC," said Roseo.
"We are certainly planning to maintain our Gold partner level and increase it if possible. Before the merger we were both a Dell and an EMC partner, so it has been quite natural to implement the new structure. We think the new Dell Technologies is a really important player in the IT market and we have only experienced a few problems with the integration, but that was inevitable for such a big integration. We are quite keen to work with them."
However, some channel partners have been more hesitant in partnering with the IT giant.
Italian firm Elmec's CTO Marco Lucchina said he noticed a lot of questions were being fired at Haas about Dell EMC's partner loyalty during his Q&A session.
"The main thing I got from [the event] was a message about being channel-first, either from HP or HPE. But, if you noticed, there were a lot of questions towards Dell EMC about clarifying the conflict between direct sales and the channel," said Lucchina.
Atea has meanwhile been in business for almost 50 years, but had never worked with Dell until the Nordic giant signed on as a Titanium Black partner with Dell EMC at the end of last year.
In what can be considered an attack against the divorced HP Inc and HPE, Michael Dell claimed earlier this year that "customers want fewer vendor partners".
"In general I agree with that," said the Atea CEO.
"We started working with Dell when they acquired EMC. As we started to become more familiar with that setup we were thinking ‘there is a lot of good IP here,' so it wasn't just because we wanted to add a new PC, it was for the grander view that Michael Dell had for his company."
The Atea CEO said that the channel is beginning to put pressure on Dell to rethink its business model and push more sales through partners. Sønsteby said Dell EMC's indirect business could reach up to 90 per cent of total sales in the long term.
"The channel now consists of around 50 per cent of their business. It used to be 10 per cent, I think it will evolve to 70, 80, 90 per cent," he said.
"I think [Dell's channel] will grow faster and faster, because the channel becomes so important to them, and companies like us pressure them to abandon more of their direct [business] and use more energy supporting the channel. As the channel is growing, they are moving people to the channel, and their direct business is falling faster and faster."
Dell EMC's revamped channel model has seen the firm cut more than 100 distributors from its fleet and lean more on the industry's big three names: Ingram, Arrow and Tech Data.
Some channel executives at the Canalys event told us, however, that a recent move by Dell EMC, which made it a formal distributor of VMware licences, has caused some friction with distributors.
Speaking to CRN at the event, Eric Nowak, EMEA president at Arrow ECS, said the deal will likely bring in some new competition for his firm.
"Of course there will be some additional competitors on some big deals or with some big customers, but on a daily basis I do not think it will change a lot of things for us," he said.
"I do not believe Dell can provide the same transactional capabilities day to day that we can. I believe they will probably make some big deals and some big customers that they would not have done before, but on a pure distribution motion and where we are, I do not believe they can bring the same solution.
"They are consistent in their approach to the channel. Of course it is a different relationship so it takes a bit of time. But I do not see any big changes in the way they approach the market."
Acquiring to succeed
During HPE's keynote, vice president of marketing at the firm Jim Jackson claimed that "Aruba is probably the best acquisition we have done".
Having grabbed Aruba just a few months before, the split company has made two more landmark acquisitions in the shape of SimpliVity and Nimble this year.
This year has also seen rumours of Meg Whitman looking to jump ship, and reports of the firm slashing 10 per cent of its headcount as part of the CEO's "de-layering" exercise. The move has seen HPE remove its European management layer, and instead focus on in-country roles.
Sønsteby, however, said that he has been encouraged by Whitman's decisions to slim down the company.
"For partners like us, we don't need that layer; we talk to the US or we talk to the local guys. So what they are doing is really strengthening the local support for us and the European level that travels around and does KPIs doesn't add any value. So I think she is doing the right thing," he said.
Lejeune also said that the European executive role was becoming irrelevant for HPE:
"It is good. I think it will bring more activity and speed in the business - I hope so. I think there will be more emphasis in single countries."
Sønsteby said" "I think she nailed it with all those acquisitions. We have invested big in SimpliVity, Nimble the storage technology, Aruba, and networking at the edge. Aruba is really good at wireless campus products and technology. We are very optimistic with what we see with the new HPE. The HPE that came out of the split was [weaker] but what she is doing right now is good."
Lucchina said: "We have invested a lot in SimpliVity. We strongly believe that hyper-converged infrastructure will become a friend that will drive our growth and revenues and I think SimpliVity is a good technology in itself. HPE have done great acquisitions with SimpliVity and Nimble and moving away from older storage and components."
The overarching theme of Canalys' event this year was "limitless landscape". And the endless canals of the event's Venetian setting are perhaps intended to be symbolic of the many avenues in which the channel can now thrive. But, as some of the industry's major vendors take their business in entirely different directions, and mass restructuring occurs on a more regular basis, the channel game has perhaps become more disorientating than ever.
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