Evolution of the reseller, part IV: An industry comes full circle
Sir Peter Rigby recalls the 1980s and explains how we've come so far today. Fleur Doidge looks for the past yet present.
By 1980 Arpanet - the first working packet-switching network - had managed to acquire 430,000 users, in a small way prefiguring today's exponential cloud computing expansion, and Seagate had introduced its first hard disk drive for the PC.
Many of the pioneer entrepreneurs that were blazing a trail for today's channel were ramping up their growth plans - including SCC's founder, Sir Peter Rigby.
"Around that time, I had bought a couple of computer bureau organisations - the mainframe was still out there, providing a service. They offered things like payroll, sold as a service. The cloud today is exactly the same," says Rigby. "What has happened to IT is that things have come full circle."
IBM dealerships were expanding and selling everywhere, as a local presence, in the early 1980s, and it also began to partner ISVs as well as resellers in the decade.
SCC followed a similar trajectory, becoming a national organisation, with 10-12 offices around the country, and ultimately the reseller part of the consortium became a totally independent business, with specific capabilities that enabled it to have more control - and therefore ability - to serve individual businesses' needs.
As competition increased, the value a provider could add became increasingly important, notes Rigby (pictured, right), which was part of the lever SCC then used to expand into France, Holland, and Germany.
"We created an international group of resellers, and even today we are one of only two or three that have that kind of reach," he says.
He too connects the evolution of the channel with the advent of true personal computing that was both cheap and accessible to a broader range of organisations.
"The reason the PC took off in the business world was because the mainframe design, build and delivery process is slow - you have to programme it, you have to integrate it, and you have to manage it and service it. And then along came this simple device; by the time the 1980s were over, there were lots of apps, word processing and, ultimately, mail apps as well," Rigby says.
"The central IT function lost control of the information of a company, because the PC evolved."
Bridging the gap
Two-tier distribution started, with distis buying up volumes of kit from OEMs, and selling them on to more specialised resellers which aimed to directly bridge the gap between the customer and the vendor, also offering perhaps some credit where needed.
Of course, as prices fell, margins shrank, and the channel began its never-ending cycle of looking for other ways to add value and generate long-term revenue streams, through, for example, services around the PC and the evolving network.
"And that's it today. Nobody is going to make money out of simply selling technology," says Rigby. "And that evolution in the channel that happened in the late 1980s was the commencement of that debate."
More British hardware debuted - such as Sir Clive Sinclair's ZX80 and ZX81, as well as the Acorn or BBC microcomputer in 1981. IBM released its 5150 Personal Computer (pictured, left) - the first one to bear the PC name - in 1981, although the model itself wasn't exceptional even at the time.
In the US, its third-party distribution got seriously underway as retailers ComputerLand and Sears Roebuck partnered with IBM, offering Big Blue their on-the-ground knowledge of the marketplace. Interestingly, although they targeted consumers first, it wasn't until they changed strategy to approach the office market that sales really began to take off.
UK distributor Midwich, founded in 1979, also began its first phase of growth in the early 1980s. After just two years, it halted its microprocessor systems production business, deciding to concentrate on distribution, and by 1983 it recorded sales of £1.1m. Printer vendor Brother was one of its 1983 signings.
Midwich has gone on growing fairly consistently ever since - in 2011 it reported group sales of £203m, and had 273 employees.
The UK channel was showing signs of increasingly rapid diversification through this period. The year 1981 saw the foundation of reseller giant Computacenter, as well as IBM and Lenovo partner Bolton Wand Computers.
It is incredibly difficult to summarise the trajectory of an entire industry in a decade. But often a new company or type of company is formed because a customer comes up with a problem which no one has been able to answer in a commercialised way.
PST Group, a specialist distributor of excess inventory for the photography industry, was formed by another channel trailblazer, the late Howard Strowman (pictured, left), in 1973 - but the company entered the IT channel arena in 1983, when WHSmith wanted help getting rid of a batch of Ferranti systems it had been unable to sell. PST struggled in the noughties, but was bought and renamed WAM, as an arm of Joe Hemani's Westcoast - itself minted in 1984 - and is going from strength to strength today.
Newcastle consultancy Partis Computing and London Apple reseller MR also appeared in 1983, soon followed by the UK's first AppleCentre, Nottingham-based KRCS, and another Apple reseller, Western Computer, which is today located in Bristol, the following year. P&P, one of the first managed services provdiers, was launched in 1986, with Advance 365 hot on its tail in 1987. Retailer Dabs - later Dabs.com - also started in 1987.
"The next evolution that happened," says Rigby, "is that the consumer wanted a PC, and particularly with the advent of home computing, apps and, eventually, the advent of the internet, where the consumer wanted to connect to the internet with a device. And I'll be honest with you: the power and the capability of the personal computer, for the consumer, has always been more effective than that for the corporate."
Proliferation and profit
In the 1990s, IBM and many other OEMs began experimenting with a wider range of channels, often tailored and shaped to target smaller, particular niches, as sales boomed. Tim Berners-Lee of CERN invented HyperText Markup Language (HTML) and demonstrated the World Wide Web. The first web search engine, Archie, appeared.
US channel giants - including Avnet, which started in the electronics distribution game in 1962, and Ingram Micro, which moved into the UK by acquiring components player Access in 1991 - became increasingly influential, especially after the dot.com crash of 2000-01 set off waves of consolidation across the myriad routes to market that had evolved.
Yet despite decades of upheaval, Rigby notes, what happens in the channel has essentially remained about personal computing, and the user. "[Today] it has become about mobility. You don't need to live in your office," he says. "It's very much about the iPad, and the iPhone.
"And there are still many small dealers; there are nonetheless bigger organisations with a significant presence, but it is not about the relationship to the vendor: it's really about the relationship with the consumer."