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EDITORIAL: Bid your heart out

EDITORIAL: Bid your heart out

I must admit I find it very hard to stand up and complain about falling margins on behalf of resellers any more.

IBM's new 7 per cent margin structure for online sales certainly didn't attract the backlash from the channel the same way Compaq's decision to go direct did. And neither should it.

There were just a handful of people who complained about the changes. From a big-picture point of view, I think they're shouting into the wind.

Ron Harris was the only person IBM told me has an issue with the model because Harris Technology already operates a unique low-margin clicks and mortar business. According to IBM, Harris is a unique case that doesn't reflect wider channel sentiment. And judging by the comments I received from resellers, it was right. Falling margins and online competition have become moot points.

Interestingly enough, all this comes after I took easy shots at the vendor community in my column last week for direct sales into large accounts, tightening control over channel partners and a quest to influence customer decision making via the Web.

I certainly won't back away from any of those assertions now. By IBM's own admission, resellers are destined to retain control of enterprise customer decision making.

Under IBM's Special Bid program, pricing for the majority of customer deals are negotiated by the reseller with IBM. So keep bidding your heart out. But of course this is nothing new as almost all vendors operate this way. But IBM has recognised that for small box sales, tight margins are required to beat Dell.

It's a bit like your average bank. Reduce costs associated with handling small, unimportant customers and focus your attention on the big bucks. However, resellers are forever guaranteed a slice of the action because big customers need looking after, and that means services, outsourcing, et al.

The last observation I can throw at you is that this story supports Quadrant's research. IBM believes most customers look to the Web first for pricing information then pick up the phone to make the sale. IT Web site's close second placing behind resellers in a recent Quadrant report confirms that online price and supporting information is a significant influencer. If the vendor is too dear on the Web, you look elsewhere before picking up the phone (that's right, very few still buy online).

Politics versus IT

ARN features writer Jeanne-Vida Douglas has managed to get a few pollies on the line for this week's lead feature ("Where are they taking IT?, page 37) and it makes for an interesting read.

Finding a decent IT policy will be a difficult task this year because it's pretty much taken for granted that IT is still just emerging as an issue of national importance. One problem is your general Joe Bloggs doesn't really care how much is invested in R&D.

The article points out that after years of lobbying, the IT industry has finally found a listening ear that's (almost) prepared to foster the growth we need for international competitiveness.

As the political debate is far from over, now is the time to find those "I'm in IT and I vote" stickers.


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