When I heard Mark Sanborn call business a thinking man's spot, it made me smile and then think. Oddly, most of these news items have all fallen in my lap today. It made me re-think how the value added distributors (VADs), like Tech Data, were going to morph.
Tech Data is the 2nd largest VAD at $26 Billion after Ingram Micro (at $37.8 Billion in sales), but TD is located in Tampa Bay, where I reside.
Tech Data has a long standing sales agent agreement with XO. Next, it established a cellular master agency with TDMobility, which also offers MDM. Then last year, TD inked a deal with master agency, Microcorp. Tech Data has long dabbled in telecom, without actually embracing it.
CDW has a telecom division that is doing very well.
SYNNEX has a $180 million per year telecommunications division, according to an executive bio I read today.
Ingram Micro inked a deal with TWC and CenturyLink.
Adam Edwards at Telarus thinks this is great. I think it is the beginning of the shift for distributors to take over for most master agencies for network services. For straight telecom services, the distributors are in a better position to automate the process for the channel and for the carriers. In fact, for cablecos who lack the automation for channel sales, working with a VAD may actually enhance their channel opportunity.
When stuff becomes a commodity like T1, broadband, cellular, voice, hosted email, web hosting and hardware, margin comes from efficiencies. I see much of this, especially in the small business marketplace becoming something you buy at Amazon or Best Buy fairly soon. The more savvy VAR's will have a check box for each service to insure that the customer has it taken care of -- and to see if she can take it over under her billing or management. The total wallet share idea.
Where does that leave Master Agencies? They will have to morph like some of them are doing into either an extension of a carrier's channel sales division or a cloud service brokerage. Unfortunately, even in both those realms, they will be competing with VADs. SYNNEX, Tech Data, Ingram Micro and Arrow have cloud platforms. Sprint is making a play in this space as well, utilizing its Parallels system to sell cloud services to its wholesale and retail customers. APNI and VoIP innovations both rolled out private label Hosted PBX services as well. It seems we have come full circle in VoIP - white label, wholesale, retail, wholesale, white label.
I think cloud will be the sticker service. Once you start selling even Hosted Exchange or Sharepoint, are you going to want 2 vendors for this or just one?
Everyone seems to be scrambling to figure it out - masters, carriers, CSBs, VADs - and even the Agents and VARs, who are the ants marching in this scenario. It takes some real thinking to figure out the next move and then the next one after that.