The natural selection of consolidation

The number of Super VARs in the market is steadily increasing

Sara Driscoll

Having already coined the phrase “Super VAR” a few months back, the term is now spreading, and the number of Super VARs in the market is steadily increasing.

The concept originally described a VAR or distributor that had acquired other companies in both the distribution and the reseller sectors. For example, Computacenter with its CCD arm and SCH with its ETC arm, are what I would call old-school Super VARs. The new breed – companies such as Matrix Communications, Logicalis, Azzurri, and Affiniti – are still buying up other channel players at a rate of knots.

But the term now includes VARs that are becoming giants by buying up other resellers in particular localities, verticals, or those who are affiliated to certain vendors. Reseller Technology Services Group has made 17 VAR acquisitions in the past two years including Open System Services last week, and other medium-sized VARs are following suit. Also last week Alcatel VAR Freedom Communications bought rival The Telephone Company, and AT Communications bought fellow voice and data VAR Sterry. And of course, the channel rumour mill is working over time, not just on who’s next, but on deals that are already in negotiations.

The majority of this consolidation is happening in the voice and data arena, which is a natural progression for a sector that is now coming into its own with real profits finally being made from the technology. The PC sector went through the same kind of consolidation, as did the networking and infrastructure sectors.

Consolidation is a natural and healthy part of the growing-up process of any sector. There will always be smaller companies who are struggling to maintain credit limits and finding it tough to get business. Equally, there are many managing directors out there who will have simply had enough of the long hours and the demanding nature of running a reseller.

Channel consolidation is almost a process of natural-selection where only t he fittest survive. These fittest remain to serve the customers and uphold the reputation of the channel.