News Analysis: Hubeaux, bubble, toil and channel trouble

The keynote speaker at this year?s IDG Global Summit predicted sweeping changes in the IT channel

The wholesale shifts in IT usage taking place in companies of all sizes will require an entirely different structure and skillset within the European channel. Those resellers that become adept at implementing complex systems, but within tightly focused vertical markets, are the most likely to survive the next decade.

These were the conclusions of recent research by IDG and of a keynote speaker at its annual summit held in Istanbul last week ? Christian Hubeaux, managing partner of networking supplier SMS.

Hubeaux believes that as companies become more dependent on mobile computing, Web access and flexible tools, there will be opportunities for resellers that offer significant value-added services, and for independent software vendors and consultants. The going will be tougher for traditional Vars and integrators, which in turn will squeeze distributors.

He predicts a complete change in the European channel by 2005. Currently, the picture is made up of vendors, consultants, integrators and Vars supplying complex kit and systems, while retailers, corporate resellers, dealers and direct vendors serve the volume market. But between now and 2005, a different class of reseller will emerge between the two extremes, which will both slip back in market penetration.

The bulk of business will go through a different breed that can cope with volume sales, as required by large corporate implementations based on hundreds of desktops, but also with highly complex systems and support requirements.

Hubeaux calls the new companies environment providers and system providers and believes only some Vars and corporate resellers will be able to make this transition.

Although most corporate computer buying currently goes through Vars, dealers and integrators, in the early years of the next century about three-quarters will go through consultants and ISVs. Resellers may remain to fulfil hardware requirements, or these may come directly from vendors, particularly with the growth of Web services.

Most channel players are well aware of these threats. The important thing is to evolve a new business model that will enable them to survive and even grow in the new world. Hubeaux identified six key technology opportunities for resellers, admitting that these may evolve into network computer resellers if the dominance of the traditional PC is eroded.

The first is migration to NT from Netware, Unix, AS/400 or mixed systems. Two, three and four all focus on communications: supply and support of messaging systems based on PC servers; mobile and remote communications systems for increasingly flexible workplaces; and implementation of intranets for activities such as electronic commerce.

It will also be critical for resellers to create their own intranets and extranets so they can offer services such as online ordering and support that customers will increasingly demand.

The next opportunity, which Hubeaux believes will fall to Vars and other third-party partners rather than the decreasing number of large first-tier vendors, will be ?continuous computing?. He believes growing numbers of companies will require real-time, 24-hour systems for applications such as order processing, so Vars will start to implement the type of systems once reserved for airlines and banks.

Finally, resellers may want to specialise in another key growth area ? digital imaging ? which will be adopted, as equipment prices get lower, for applications as broad-ranging as design, training and video conferencing.

All this means resellers that prosper will have to place far greater focus on services, consultancy and pre-sales advice. Service opportunities lie in areas such as technology assessment, migration support, infrastructure analysis and deploy- ment and asset management, all tied to service level agreements and 24-hour helplines and disaster recovery. For some, this will be a very different picture from today?s focus on implementation, cabling, software loading, maintenance and basic training.

As firms take advantage of at least one of these opportunities, the industry will no doubt start to refer to resellers as ?environmental providers? or some similar term. But a new label will not be enough, as many vendors have discovered when trying to shake up their channels. The channel will need support from its suppliers in acquiring the skills to turn box shifters into system providers.

The shift in the industry?s channel strategy comes at the same time as Frank Gens, senior VP of research at IDG, predicted that the Microsoft/Intel dominance of the desktop would be dead within seven years.

Gens highlighted five key issues at the IDG summit, pinpointing customer automation, the internet, the decline of the Wintel model on the desktop, the rise of the NC as some of the key shapers of the next wave of the IT market.

?The consumer market is forcing high-volume, low-cost models on to vendors and the channel. Also, the business PC market is focusing on lifecycle management and cost of ownership. These complementary trends will work to the advantage of the NC and will make Wintel PCs a minority in the workplace and home by 2005.?

So the channel faces uncertainity over the next eight years as it gets to grips with the changing nature of resellers, as well as the shift in balance of power with Microsoft and Intel.