Channelling 2006: Your predictions for what lies ahead

Technology convergence and consolidation proved the catchcries of 2005, as the industry attempted to make the most of linkages between the IT and CE, and IT and telco markets.

But getting a solid financial return will be the key to channel success in 2006.

This year, an array of suppliers directed their attention towards the digital home, looking towards Microsoft's Media Center Edition (MCE) and related consumer convergence products as a way to improve lagging profit margins on IT hardware.

Industry pundits predict the impending launch of Intel's Viiv platform for the home media network, expected in January, combined with rising broadband penetration across the country, should catalyse a leap in sales over the course of next year.

IDC has highlighted new application technologies, such as video on demand and IPTV, as becoming more transparent in 2006, further promoting digital home connectivity.

The convergence message has also been two-fold, as the higher end of town branched into developing integrated data and telco solutions, such as VoIP, across the network.

In a recent IDC report, one in seven businesses across Australia were found to have already deployed a VoIP system.

Plus Corporation managing director, Nigel Fernandes, said the reseller's strategy for 2006 would remain relatively similar to this year's focus: 64-bit computing and high-end gaming machines.

While notebooks proved increasingly popular in both the corporate and consumer space, retail pricing would continue to fall as their functionality grew, less profitable for resellers, he said.

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Rethink hardware

Fernandes forecast Intel and AMD's 64-bit processors would help to keep PC sales ticking over consistently next year.

The release of Microsoft's Windows Vista, expected in the latter part of the year, would also cause a resurgence of interest in the PC market by giving people an excuse to dump their two- or three year-old systems, he said.

"Users will have to rethink their PC hardware," Fernandes said.

He predicted 2006 would also be the year for gaming, with the forthcoming release of PlayStation 3 and Xbox 360 shifting the focus back into that technology sector. But he didn't think the two consoles would help improve uptake of the Media Center PC, and claimed that MCE sales would continue to be low into 2006. "I think these consoles will actually cause people to turn away from MCE," he said.

"Both offer high-definition video, so consumers will opt to blow $500 or $600 on these, and forget the Media PC. They could spend the extra on a plasma screen instead. I don't know anyone who is getting return on MCE."

But Netgear director of partnerships and services, Ryan Parker, claimed Xbox 360 would assist in driving consumer interest towards an integrated digital home platform.

While home convergence technology had been more talk than take-up in 2005, he suggested consumers would start to direct their dollars towards these types of products in the second half of the New Year.

Broadband penetration would drive this transition, along with a larger breadth of content and applications.

"The jigsaw puzzle pieces weren't all there this year," he said. "Today, when you talk about digital home buyers you are talking about households with extraordinary incomes. This only represents a small percentage of the Australian population. It's got to get easier, be more cost-effective and offer more content and applications.

"This year we were restricted to major brands, so the price point was prohibitive for the consumer."

Harvey Norman general manager of computers, Rutland Smith, was confident Media Center PC sales would grow, while the games console business would be invigorated by broader adoption of the PlayStation Portable and Xbox 360 devices.

He also singled out wireless broadband as another fast growing category next year, and a key focus for the retailer.

"2006 will be a similar year to 2005, as we continue to move towards the digital home," he said. "It's an education process - as customers become more aware of what this is, the technology will gain further appeal."

Parker predicted next year would also see VoIP gather momentum in the home and SMB space.

"A lot of people have been talking about it this year, but this hasn't translated into the take-up everyone has anticipated," he said. "There hasn't been any shortage of marketing from the likes of Engin and GoTalk to raise awareness. But the general consumer is hesitant and isn't seeing the benefits. I think it will start to increase mid-year."

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Telco talk

The VoIP story is more comprehensive at the corporate end of town. IP-based communications have already made significant inroads into the business and enterprise sector, forcing integrators and telcos to rethink their position in the marketplace.

According to IDC, telecoms service providers needed to adapt in order to gain a stronghold in the changing playing arena. The analyst firm has claimed IP PBX will become a more attractive proposal for SMBs for 2006, as shipments of IP telephony lines surpass time division multiplexing (TDM) lines in the business market for the first time. Cisco regional manager for A/NZ channels, Suzanne Hansen, said the vendor had experienced a great year due to the penetration of its advanced technologies, ranging from IP communications, security and mobility to data centre products.

These would continue to be the focal points going into the New Year, she said.

The networking vendor planned to complement these areas with a push into more vertical applications, as well as greater efforts in the SMB space.

"As the network becomes more applications aware, it becomes much more relevant to business decision makers who also manage overall business process," Hansen said.

"We want to work with our partners, especially those with strong services practices, to develop full lifecycle services around maximising the technology we provide, and to help those who are able to move into more applications awareness."

While some resellers were tuned in to the applications capabilities offered through products such as the Cisco Integrated Services Router, Hansen said the key channel strategy for 2006 would be to get more partners selling converged network services.

"The technology is there - it's about having the business processes and applications understood by the channel," she said.

Marketing director for national integrator Dimension Data, Gerard Florian, identified two areas of focus in 2005 which would carry through to the New Year: consolidation and collaboration.

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"Consolidation of storage and the data centre is a big piece of everyone's plan," he said. "This is occurring as a step to something else, such as virtualisation. Users can't get to this until they have consolidated their data centre.

Florian said enterprise application integration (EAI) was also becoming a core ingredient in its infrastructure services.

"IP telephony is certainly being looked at," he said. "But users are now working to integrate this with their Microsoft environment and getting information out to people. One area in which we are seeing evolution is vertical applications - for example, using IP telephony in healthcare, or a professional services firm."

Mobility was also becoming a significant factor in network integration and collaboration and would continue in leaps and bounds in 2006, Florian said.

Microsoft partner director, Kerstin Baxter, said the company had been working with telcos and hosting providers to develop remote applications for customers for a while.

"There is an emergence of great new mobility solutions and devices. But without strong integration solutions behind the scenes, these aren't useful," she said.

"With VoIP, wireless, mobility and people looking for more flexible working environments, there are plenty of convergence opportunities for our partners."

2005 was the year of upgrades for Microsoft, with the release of new versions of SQL Server, CRM, Great Plains ERP and Visual Studio development tools, Baxter said.

The software giant's message for 2006 was to emphasise the need for integration between the pieces, she said.

"In our channel community we're focusing on matching up complementary vendors that integrate well to tie these elements together," she said.

"There has been a maturing on the partnering perspective. Because of the vast knowledge needed in our whole industry, partners realise they can't deliver it all. It's better to partner then let the customer find someone else."

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Security stamp

Another hot area which will continue to hold a prominent place in the minds of the business market is security. Marketing director at security distributor Firewall Systems, Nick Verykios, said 2006 would be the year of the Unified Threat Management (UTM) device.

Security was moving in two directions - ID management and authentication, and intrusion prevention, he said. Both of these were driven by a need for compliance and a no-risk environment. However, corporates were still being overwhelmed by the sheer number of vendor products required to cover all security issues.

Resellers should step away from a vendor product sell, and look at security as a managed service, he said.

"Customers don't have to throw away anything - this is not a replacement sell, but a fulfilment sell," Verykios said. "But, more importantly, it is an opportunity for the reseller to own the customer and be a trusted consultant.

"There is a big opportunity in consolidation security with a purpose-built UTM hardware appliance that houses what the customer already has."

Di Data's Florian also highlighted WAN optimisation and intrusion prevention security solutions as remaining at the top of the list for the enterprise sector next year.

Netgear's Parker said it was already in tune with the need for better bandwidth management.

The vendor planned to bring out faster, higher capacity switches based on 10G, as well as SSL VPN solutions next year.

It was also expanding its wireless product range to cater to the increasingly innovative ways businesses were using the technology, he said.

The ratification of the WiMax wireless broadband standard, along with Intel's investment in Unwired this year, were providing the impetus for that space.