10 Things I Learned About the Channel This Summer, Part 3

10 Things I Learned About the Channel This Summer, Part 3

The channel has more vendors and influencers than ever, while consultants aren't doing as well. Then there's this thing called the cloud. My final observations on the state of the channel.

Part one of my three-part series on what I've learned about the channel this summer focused on how the channel is getting smaller and younger and the strength of M&A. In part two, I took a look at the state of managed services, the increasing importance of mobility and how VARs are more "S" than "M" in the SMB space.

So what are my final four observations? Read on and find out:

7. Vendor numbers are exploding: The above trends have an interesting side effect—the number of vendors in the marketplace is growing at a surprising pace.

Channel companies are leveraging their deep industry knowledge with unique integration skills (across dozens of vendors' APIs) and creating products and specific IP to address niche solutions.

At one time it was called “value add,” but today partners are incorporating these ideas into new companies and products and then going to market themselves. These products have narrow addressable markets and the need to find resellers will continue to grow.

I predict that in 10 years, the number of vendors will outnumber the amount of pure-play resellers.

8. Influencers and Connectors are becoming more important: Without naming names, our entire channel ecosystem boils down to a small number of individuals who connect large amounts of like-minded people. You probably know many of them!

For example, the North American IT channel has roughly 100 people that will get you one degree of separation from anyone else. These super-connectors are very different from one another—some are media, some run associations, others are vendors or distributors, others make a living on making connections for you.

Some things are clear: The amount of noise and clutter will not stop growing. People buy from people they like. Economic scarcity is evolving into information scarcity. The network effect will drive winners and losers in the next 10 years.

9. Consultants and coaches are struggling: The post-2008 economy combined with cloud, content marketing, consumerization of IT & DIY are squeezing average consultants and coaches out of the game.

Check out the daily job change notifications on Linkedin and you will see this group shifting jobs more than any other group.

The good news is that thinning the herd will have positive outcomes for the channel. The same way I want my real-estate agent to be the best in town, I want my consultant or coach to have successfully done what I am trying to do.

10. Convergence is being driven by cloud competition: I have spent a lot of time and energy explaining how pervasive computing and the Internet of things would drive industry convergence—finally bringing together IT, telecom, print, AV and all other technology channels under one roof.

Where I got it wrong was focusing on the network. I figured that all data would travel over a single protocol across one Internet and that would drive vendors to build and adhere to open standards, allowing disparate technologies to talk.

Well, not so fast. Twenty years later …

The cloud is creating competition in places we didn’t expect and almost every traditional vendor is threatened by the rapid growth of public and private clouds. Million-dollar customer deployments of hardware and software are being replaced by $20/user/month offerings that are being decided outside of IT.

Fifty percent of all IT dollars are now being spent outside of IT by people that vendors and channel partners don’t know all that well. Sales, marketing, finance, HR, operations and development teams are rapidly deploying technology and it is forcing the channel industry to get smarter.

These trends are reshaping the channel, not replacing it. As with every other threat in the past 30 years, the channel will come out of it stronger, more nimble and better able to serve evolving customer needs.

Now, what will fall bring?

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