Four Managed Services Predictions That Never Came True
I’m out of the office this week. Sort of. When I’m on vacation it gives me a chance to step away from the managed services market and the IT channel, regroup and reflect. It’s been nearly five years since Nine Lives Media, now a division of Penton Media, launched MSPmentor. Our websites — and third-party industry pundits — have made plenty of managed services predictions over the years. Here are four that never came true.
1. Rapid RMM Market Consolidation: A few years ago, I assumed big technology companies (mostly likely Cisco Systems, Hewlett-Packard or Microsoft) would either buy or build their way into the managed services software market — placing a heavy emphasis on remote monitoring and management software. Cisco and Microsoft have launched their own offers but they aren’t out to disrupt the market. Plus, a few strategic deals have occurred — such as Quest Software buying PacketTrap, Citrix buying Paglo, ConnectWise investing LabTech Software and Summit Partners acquiring Zenith RMM (now named Continuum). But overall, the RMM software market remains highly fragmented. I suspect there are six to 10 RMM software companies that each grew between 10 and 50 percent last year…
2. Amazon Web Services Dominance: Back in 2008 or so, I assumed Amazon Simple Storage Service (S3) and Elastic Compute Cloud (EC2) would disrupt the cloud storage markets, particularly in the channel. Yes, Amazon Web Services are now somewhere around a $500 million to $1 billion business. But several BDR (Backup and Disaster Recovery) storage companies have emerged to help MSPs protect company data — both on-premises and in the cloud. Cloud storage and BDR remain big channel opportunities, despite Amazon’s emergence.
3. Master MSP Dominance: I assumed that a few dozen MSPs would evolve into Master MSPs serving specific regions (the U.S. east coast, the U.S. west coast, etc.). In theory, the Master MSPs would offer their hosted and managed services to aspiring MSPs and VARs. A prime example: Virtual Administrator gained critical mass promoting remote monitoring, storage, security, hosted email and other services to MSPs.
But Virtual Administrator has been the exception to the rule. Several market realities stopped the Master MSP wave from gaining critical mass. In many cases, it was too expensive for Master MSPs to recruit and train peer MSPs and VARs. Master MSPs like Do IT Smarter and MSP Services Network (MSPSN) either evolved, got sold, closed or existed the Master MSP model entirely.
Meanwhile, some Master MSPs — such as the Ingram Micro Seismic effort — evolved aggressively toward cloud computing strategies. The Ingram Micro Cloud initiative, for instance, aims to be a cloud aggregator for VARs, MSPs and cloud brokers.
4. Managed Services Pricing — Race to the Bottom?: Back in April 2008, MSPmentor noted that some aspiring MSPs had entered the market with super-low pricing. More recently, the 2112 Group issued a report, accurately pointing out that some MSPs were under-pricing their services. (NetEnrich and N-able sponsored the report.) Still, the vast majority of top MSPs keep telling me they aren’t feeling a pricing pinch. I’d label those folks sustainable MSPs — the types of businesses that don’t chase every dollar. Some folks will always set their prices too low. But we haven’t seen a wide scale race to the bottom on managed services pricing.
So, careful with those market predictions. Plenty of ours have missed the mark — though I hope our track record for accuracy and managed services market knowledge remains strong.