A day or so ago I read a post over at No Jitter by Matt Brunk that cast the IP communications channel as an eroding numbers game. The post was interesting to me as I’ve experienced the continual squeeze on margins through the years. Plus I’ve witnessed the frustrations of channel sales and marketing in today’s environment from working closely with many a manufacturerand service provider.
While Matt’s take on the current state of the IP communications channel is very real, his reasoning for it and resolution for improving it are off.
The present issues within the IP communications channel is not due to a numbers game as Matt suggests, but due to that channel game changing. All due to the Internet.
The Internet has had a profound effect on how businesses procure telecommunications services and the low cost scale companies supplying these services can achieve.
In short, it’s a perfect mixed for the new and nimble. A disasterous mix for the old and slow.
Businesses are no longer going to their Yellow Pages or local VAR for their communications needs. They’ve got the Internet. So they go there to do their research – and their shopping.
This is fine if you were prepared for it. But many a telecommunications VAR and even data networking VAR wasn’t (or isn’t).
It’s not just the VAR’s though, it’s the whole rest of the channel. Manufacturers and distributors on the whole have been slow to embrace and adapt. They’ve clung close to the ways of old, ignoring or even denying the fact that their business would need to change and evolve.
Naturally newer entrants have emerged and created new models that leverage all of the benefits of the Internet to deliver comparable VAR experiences to customers at a scale physical VARs could never achieve at the margins which currently exist.
Customers get everything but the hand shake and butt crack. All for a fraction of the cost.
It works for end businesses, thus causing the game to change. As such the traditional channel way is no longer the right game to play.
Sadly, the answer to fix the woes that are present for many within the IP communications channel is not in value and price deflection as Matt suggested. The answer lies in the channel coming into alignment with the way end businessed are purchasing communications products and services.
The game is changing and those within the channel will need to change.
More to come in the future…