Mmm 100 Stocks
Mmm 100 Stocks
What is the IT Channel exactly?
The million dollar question. Recently, randomly, someone asked me a question. What, they inquired just a little coyly, is the IT Channel exactly? Mmm.
A sensible, perfectly reasonable inquiry to which – my having worked on channel magazines for the best part of a decade – you’d think an equally sensible, reasonable answer would quickly present itself. Uh uh.
OK, in all fairness, the channel’s reputation for being a complex, multilayered, somewhat incestuous milieu goes before it, but my temporary inability to find a concise response was still a surprise. It also got me thinking that I ought to have a some kind of comeback should I ever be asked the same thing again. Here then, for the record, is my new but still rough stock response.
In essence, the channel is simply the gap in the IT marketplace between the vendor and the end-user. Distributors, resellers, integrators, consultants. In other words, the ‘indirect’ partners via which most IT vendors bring their products and services to market.
Why so? Well several reasons actually. But most boil down to the fact that even the largest manufacturer can’t put feet on every street and because, by the same token, being local the channel business can, in theory, build closer, more trusted customer relationships.
The channel also helps keeps prices in check. Without the reseller it wouldn’t be feasible for the manufacturer to sell say, a £100 laser printer for £100, because the cost of sale would outweigh its value and probably end up delivering poor customer service. Buying Product X from Vendor Y at one price and selling it on at a (generally pre-agreed) margin, the reseller also (again in theory) adds value via specialist knowledge and expertise, and with integration and support services.
And here’s a thing. The channel works. Honest. So much so that even 100% ‘direct’ companies – you know who you are Dell – still work with partner channels. (Whisper it quietly, but as many as one in five Dell sales are rumoured to be indirect these days.)
Naturally though, as is the industry’s wont, because the channel model isn’t broken everyone’s forever trying to fix it. While most resellers are selling much the same thing they always have, for instance, it’s now all packaged not as “products” but as “services” (i.e. SaaS, The Cloud et al); services channel businesses don’t own, manage, or often even support.
Vendor attitudes are changing too; localised sets of partners increasingly being replaced with something no longer based on location, but expertise and sometimes simply sales ability. Again, in fairness, much of this comes down to evolution; natural selection.
Like technology itself, it’s a case of evolve or die where the channel’s concerned. Its biggest assets and raisons d’etre remain what they always were however: value, expertise, trust, and close customer relationships. When it comes to picking a technology supplier those are still the only questions that really matter.
Dow Jones Index May 2011 Technical Analysis & Trends
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