Scraps between storage vendors and resellers are an old story, but in today’s aggressive market they’re getting worse. Just ask Terry Kell of Ottawa’s Kanatek Technologies.
“”We’ve engaged in large requirements, some of which take 18 months, and all of a sudden a vendor of a key part decides ‘It’s
a competetive market, there’s no margin in it, we’ll take it direct,'”” he complains.
“”We’ve seen that happen more in the last six to eight months than in my 22 years in this business.”” said Kell, who’s on reseller advisory committees of several vendors.
“”It’s not pleasant,”” he said. “”Some vendors don’t have a mature channel strategy. There’s pressure to make their numbers every quarter, so they’ll cut a deal with a customer.””
Small wonder that in a recent survey, storage resellers told Gartner Inc. that the number one challenge they face is resolving channel conflicts with suppliers.
That draws a chuckle from Adam Couture, the report’s author.
“”It was a little confounding and disappointing that channel conflicts remain even on the services side to be the number one issue,”” he said in an interview.
“”With all the time vendors have had to resolve them from hardware sales, we’re still seeing them spilling over into services.””
These problems range from resellers of the same product in a region fighting each other for business, to customers taking bids from integrators on products from EMC Corp. and then going to the Dell Computer Corp. Web site to see if they can get a better deal by ordering EMC products direct.
“”That’s giving them a lot of indigestion,”” Couture said the survey shows.
The report offers more evidence that storage vendors are focusing on software and services, despite the increasing demand for hardware, because equipment prices are plunging.
By 2005, Gartner figures, vendors will be shipping 4 petabytes of hard disk storage systems worldwide a year, more than twice as much as this year. But hardware revenues will remain flat during the same period.
To keep profitable, resellers and vendors are pushing software and services. That’s good news for resellers, says Gartner, because the channel can also augment service sales.
Gartner’s poll bears that out. While 44 per cent of resellers polled said their hardware revenues increased in the past two years, 78 per cent said their services revenue had gone up in the same period.
While only 18 per cent of respondents said storage services accounts for more than 20 per cent of overall revenue today, more than half believe that in the future it will contribute to at least that much of their income.
The second biggest challenge storage resellers said they face is the lack of interoperability between hardware and software from various manufacturers.
Kell agrees, but notes this is where a reseller can take advantage of its professional services. “”If a VAR expects a product to meet 80 per cent of the customers’ requirements out of the box, forget it