Lifting the channel's services game
- 14 May, 2008 12:30
What's the reseller channel organisation focused on?
Steve Dallman (SD): Inside the world-wide channel organisation we have groups identified in each geography and it's my role to hold them together from an organisational standpoint, make sure we define what our direction is, what we are going to push and then work with them to remove any barriers. A large part of that is working with our distributors and making sure there is consistency in programs, methodologies, processes and business practices. Synnex, Ingram Micro and Tech Data are some of our biggest distributors globally.
North America is probably where we have the highest density of channel partners. The market has been developed there for longer and they have really addressed SMB. In the next couple of years, China will grow dramatically and we're working on developing that market to help partners go from selling inside of a mall to aiming at medium-sized business.
Where are the opportunities for channel partners this year?
SD: There are a lot of possibilities popping up right now. A lot of suppliers over the last few years have asked how they can continue to make money. The advice has been to 'go sell services'. The problem with a lot of hardware suppliers telling partners to go and sell services is that their products haven't really supported services.
With this current generation of Intel architecture, a larger percentage of the CPU transistor budget has been dedicated to providing capability that generates services opportunity.
What Intel is doing with products like vPro for example is taking a significant part of the transistor budget and putting hooks inside of the silicon that actually support services. This allows partners to provide capabilities around that. It also gives a standard set of instructions which applications software writers can utilise to get into that services game. Our channel traditionally hasn't taken advantage of moving into services. Whenever they heard of services, they were thinking of the break-fix model - they weren't thinking of issue prevention or enabling the ability to watch a hard drive remotely to see if it is crashing or having any sector errors. Now they're able to do it.
We're coming out with some hosting services shortly that partners will be able to use and we are going to provide training and access to this huge partner base we have.
We had a goal last year to deliver 1 million vPro ready systems through the channel and we hit it. The focus for the second half of the year will be enabling those platforms. We have adjusted our programs, benefits and some of the bundles to get the install base going and in Q3 we will begin promotions that will turn it on.
How can channel partners overcome tight margin conditions?
SD: The key thing partners want to do is look for opportunities where they can refresh what their customers have, as well as branch out and look for new customers. It is really important channel partners get their heads around services because it not only provides a revenue opportunity that pays every month, it also strengthens the relationship between a partner and the customer and allows them to deliver systems enabling services.
Another area with tremendous opportunities that I don't think will be impacted by slowing growth is servers. We haven't begun to penetrate the server market in the places we are in, especially in the APAC region.
I also think the move towards small form factor is a growing area. These types of machines are going to be really attractive to small business and it is where the channel does really well.
What's the future of the PC desktop market?
SD: The data I have seen from IDC and other analyst groups shows the desktop market is growing slowly globally - it's not retracting. It won't achieve the double-digit growth we have seen in some areas like mobility but it's going to keep growing.
Markets in APAC seem to have a strong desktop base that continues to grow, while in some of the mature markets like North America uptake is a little bit less. The vast majority of growth in those markets was around servers and desktop.
An interesting point is that out of all the desktop areas that are declining, consumer is the one that has slowed down the most. Enterprise is still growing a little bit and small business is growing a lot and I think that is phenomenal. Small form factor will be a real opportunity for the channel especially in small business.
What advice would you give channel partners trying to penetrate those markets?
SD: Firstly they need to learn how to integrate with small form factor, know the suppliers and build on that. It is one of the things we are training partners on. Around the server space, we will also be doing some technical solution training on servers and bringing them up to speed on that.
One of the things I find discouraging is that while the channel keeps thriving and going forward, it's not always the same partners succeeding long-term. In any year, a large percentage of them go out of business while a whole new percentage of them come into business.
As the world changes, the channel tends to morph and change with it, but we do it in such a way that those partners that fail to adopt are eliminated. Instead, new players come in and fulfil that niche where the channel can provide value.
I keep emphasising to partners that they need to look a little bit beyond what they are doing today and be willing to move into complementary business areas. If they invest their intellectual equity in understanding these new areas, it will open up an opportunity to succeed because they're the ones with experience.