Will You Be Extinct?

Peter : On Rad's Radar?
Peter
| Peter Radizeski of RAD-INFO, Inc. talking telecom, Cloud, VoIP, CLEC, and The Channel.

Will You Be Extinct?

Yesterday I had lunch with XO's Tom Gorey and Peter Davis. We spoke about the fast changes taking place in the channel space. Tom used to work for Ingram Micro, so he understands the VAR space as well. 

The big issue for both VAR's and Agents is that the price pressure on hardware and telecom services is shrinking margins and commissions fast. We all remember when Internet T1's were $1500. Now they are $450. So your net commission is less, and you have to scramble to sell more and more to maintain the same pay.

We saw this in LD (long distance). LD minutes went from $1 to 5 cents and now are sitting at a penny. Commissions have shrunk due to less traditional TDM LD traffic (thanks to cellular and VoIP replacement) and the much lower prices. 

VAR's have seen it with routers and computers. Heck, laptops and desktops are in the $400-$600 range for a good one. The points on that price are small. How about on a printer which are practically free if you buy the ink?

The vendors are worried that VAR's and agents won't survive. How can you when your income is dropping so fast? 

The smart ones are adding revenue streams and morphing into the MSP space. Managed Services are coming as we move to Cloud based data and apps - and a very mobile workforce that needs access to these apps. The technology is rapidly escaping the grasp of most people. Business owners are scrambling just to keep their business afloat without wanting to worry about technology - the Internet, email, the printer, etc. MSP's take all that pain away at a fixed cost.

My overall view of the Channel is that they have to bring value and skills to the marketplace to get away from the whole price discussion.


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