Avaya predicts further channel rationalisation

Avaya predicts further channel rationalisation

More channel rationalisation is on the cards as vendors pursue further cost reductions in order to take advantage of the 80-20 rule, according to IT telephony and wireless specialist Avaya. But the vendor is still looking to partner.

Managing director of Avaya for South Asia, Carlton Taya told ARN that although the majority of its business in the region was generated by 20 per cent of its resellers, the channel remained the key to the company's recent market success.

“Like other vendors, we find that 80 per cent of our business Asia-wide is generated by 30-40 companies who have worked out their value-add,” Taya said. “But we continue to investigate the best way to take the product to the market, so, we are keen to hear from resellers working in our space.”

Avaya, which abandoned its direct-for-two-tier channel strategy about 18 months ago, has found the two-tier proposition a winner. The company is now looking to boost its reseller numbers in order to leverage its push into the IP telephony space.

“We don’t really want to put dollars into distribution, our dollar investment is focused on R&D,” Taya said. “But as long as there is a value proposition in the channel, we are going to use it to get more coverage in the market.”

However, Taya warned that the number of resellers in the Australian channel outstripped the actual market demand for their services.

“When you have 130 people bidding for one tender, as is the case in the market now, you know that there are too many players out there,“ he said.

Taya said that as distributors stepped up efforts to add value, resellers who did not concentrate on services would simply die away.

“There’s not much margin to share around and that means that margin is taken away from the reseller, making it hard for them to survive,” he said. “Resellers who don’t work out their value proposition and focus on product moving just don’t stand a chance.”

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