Computing and connectivity are moving back to the edge, Aruba Networks founder and president Keerti Melkote told delegates of Aruba Atmosphere in Las Vegas, Nevada this week. As a result, channel partners that have seen their business challenged by the cloud see new opportunity for profits, he said.
During his keynote presentation, Melkote shared a timeline of networking trends, from centralised with the mainframe from 1960 to 1970, distributed with client-server from 1980 to 2000, centralised with mobile and cloud starting in 2005 and distributed with edge intelligence beginning in 2020.
The exec told Atmosphere's 3,100 delegates that the market's next step is a return to the edge, where the client-server architecture needs to be reimagined in the context of the Internet of Things, where devices like autonomous cars function in constrained environments lacking elastic compute and storage.
"That's really where we see, architecturally, things shifting," Melkote said. "As you start to look at investments that everybody is making in Silicon Valley and beyond, it's going into building this next-generation architecture that is edge-centric. And the edge and the cloud are going to be cooperating and working together to enable this next level of intelligence in our infrastructure."
In an interview, the executive said this translates into excitement for channel partners, many of which have felt threatened by potential disintermediation from the cloud with customers getting their offerings directly from vendors.
"We feel the resurgence of the edge gives our partners the opportunity to go in there and show what value they can bring by bringing integrated solutions to their customers," he told Channelnomics.
But while this may present solution providers opportunity, Melkote stressed they will also need technical skills to seize it. This includes know-how around integrating services customers are looking for to solve their business problems, as well as expertise in edge computing, security and software.
He pointed to solution providers offering catalogs filled with various products.
"In that world, the popular products, if you will, get over-distributed, and as a result of that the margins are very, very thin on those products. Yes, the revenues are on those products, but the margin profiles of those products are pretty tough. So [partners] typically rely on the lower-volume products to differentiate themselves against their peers and build a slightly more profitable business, but at the end of the day, margins being what they are, they're trained towards the higher-volume components," Melkote said.
It's important for solution providers to question how to break focus on volume-selling as "ultimately, the profit pools are not in volume", he added.
"The profit pools are moving higher and higher in the stack to solution providers that can provide an integrated solution to the customer, and that requires technical skills at the end of the day. That is the key.
"As a partner you need to know whether you're a volume player or a value player. And you can be a mix of both, but if you want to be a value player, then you need to have the technical expertise to go with it. If you're a volume player, then it is less required, it's a different business model, and, of course, that business model will exist for a long time."
On Aruba's end, over the next year the networking vendor will look to evolve from a provider of wireless networking to a more holistic provider of edge infrastructure - wireless, wired, compute and storage delivered through software-defined architectures, Melkote said. This will be combined with a more software and services-centric approach, as opposed to a hardware one, he noted.
"The edge is a place of growth. Unlike other areas, which are under stress from a spending standpoint, our primary markets are growing, and it's an area that [partners] can invest in for the long term because…the shift to the edge is a decade-long trend…," he told Channelnomics.
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