Channel Marker

Oct 3 2008   10:20AM GMT

Aggregating manufacturers: Very bad for the channel



Posted by: StorageSwiss
Tags:
Direct reseller channel conflict
George Crump
Supplier relationship management

I’m taking a quick deviation from the economy today for some thoughts on what I call the aggregators. These are manufacturers that for one reason or another have stopped or slowed down on innovation and are using their position in the market to acquire companies.

This is not good for the channel, especially the part of the channel that still wants to add value to manufacturers’ products through integration (that’s why they’re called integrators, right?). When manufacturers offer EVERYTHING (including services), it removes one of the best ways that a VAR can add value: integration.

VARs should be the “glue guys,” companies that can take different components from different manufacturers and make them all work together by — get this — integrating them into a solution. When a manufacturer offers everything, it becomes difficult, although not impossible, for the channel to add value, as I will explain in an upcoming article on SearchStorageChannel.com.

What really drives me crazy is when a manufacturer OEMs a solution. How many times has a manufacturer given you a hard time about having competing product lines, yet these same manufacturers don’t have the commitment to their own beliefs to develop their own solution? At least by buying something, they commit to it financially. OEMing something? Frankly, that’s just greed.

And then there are startups. They focus on one thing, and almost always count on the channel to deliver and integrate it with the rest of the customer’s portfolio. Interestingly, there is a love-love relationship with these guys. Your only fear as a reseller — and it’s a legitimate one — is that just when things are getting good, the startup will be consumed by an aggregator, errr, I mean manufacturer.

While there are established manufacturers that do a good job in the channel, the truly excellent channel-friendly manufacturers are typically smaller, more focused companies. Face it, they need you as much as you need them, and that’s a good start to any business relationship.

There’s something I hear all the time from these manufacturers, and it’s one of my favorite lines: “Our customers demanded that we offer a complete solution.” Really? What it really translates to is, “Our direct sales organization needs more products so they don’t have to include resellers in the deal.”  I talk to end users all the time, and I have never actually heard a customer say they wanted a complete solution from a single vendor. Yes, they want complete solutions, but they want best of breed, they want integration. And let’s see, who is most qualified to integrate? Integrators!

George Crump is founder of Storage Switzerland, an analyst firm focused on the virtualization and storage marketplaces. It provides strategic consulting and analysis to storage users, suppliers, and integrators. An industry veteran of more than 25 years, Crump has held engineering and sales positions at various IT industry manufacturers and integrators. Prior to Storage Switzerland, he was CTO at one of the nation’s largest integrators.

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