Dell’s acquisition of Silverback shouldn’t worry channel: observers

The news that Dell Corp. is purchasing managed services provider (MSP) platform vendor Silverback Technologies has gotten the channel’s attention, but observers say the entry of the direct sales poster child into the managed services space isn’t necessarily an ominous omen for the VAR community.For Dell that has been investing heavily recently in the services side of its business, Silverback brings a proven platform for remotely monitoring and managing IP infrastructure. David Graves, a spokesperson in Dell’s product group, said Silverback will fuel Dell’s long-term growth strategy around simplifying IT for customers.

While Dell has long been known as a direct-sales champion, the vendor made headlines earlier in the year by taking some steps to embrace the channel, and Silverback has a strong existing channel program. At this point the Silverback acquisition hasn’t closed and the go-forward strategy hasn’t been announced, but Graves insisted the channel will be a part of Dell’s plans with Silverback.

“What we’re really committed to is customer choice in how customers chose to purchase from Dell, whether it’s directly from us or via a channel partner,” said Graves.

It makes sense for Dell to continue to maintain and grow Silverback’s channel relationships, said Michelle Warren, a senior analyst with the London, Ont.-based Info-Tech Research Group.

“Dell’s focus is on serving the customer in the best way possible, and when selling managed services it’s really more effective to use the channel partner,” said Warren. “It’s a complicated sell and there are a lot of components that need to fall into place.”

For other VARs playing in the managed services space, she added that she sees Dell’s entry into the market not just increasing competition, but also increasing opportunities.

“It sounds ominous for the channel, but I don’t think it will be as bad as everyone is saying,” she said.

Far from being ominous, Ingram Micro also sees Dell’s move as a positive development for the MSP channel community that legitimizes the space in the eyes of end-users. Ingram offers an MSP solution to VARs with its Seismic platform and Richard Caballero, senior sales manager of Ingram Micro Canada’s services division, said he welcomes the Dell deal.

“Dell doesn’t go into markets that aren’t mature, so from our perspective it means the MSP market has now moved from emerging to mainstream,” said Caballero. “Dell will create a lot of end-user demand that will make it easier for our VARs to be able to sell managed services.”

Caballero rejects concerns Dell’s entry could lead to a commoditization of managed services. An end customer will not necessarily outsource their whole environment to somebody with the lowest price, but rather the MSP they trust, he said.

“If you think about it, the idea of the commoditization of managed services is counterintuitive to the basic nature of managed services,” said Caballero. “I don’t think commoditization will happen any time soon.”

The entry by Dell does create a moment of pause for VARs though, said Caballero. For existing MSPs, their decision to enter the space is validated, but those on the fence need to make a decision.

“Getting into managed services is not as easy as getting into a product focus; it’s a business model,” he said.

While managed services are a lucrative revenue and profit generator for many VARs, Caballero added it’s also a defensive strategy. Managed services, he said, is also about customer stickiness.

“Once a customer goes into a managed services arrangement it’s very hard to displace them,” he said. “From a strategic decision, VARs need to make a decision whether they’re completely going to stick with products or add managed services.

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Jeff Jedras
Jeff Jedras
A veteran technology and business journalist, Jeff Jedras began his career in technology journalism in the late 1990s, covering the booming (and later busting) Ottawa technology sector for Silicon Valley North and the Ottawa Business Journal, as well as everything from municipal politics to real estate. He later covered the technology scene in Vancouver before joining IT World Canada in Toronto in 2005, covering enterprise IT for ComputerWorld Canada. He would go on to cover the channel as an assistant editor with CDN. His writing has appeared in the Vancouver Sun, the Ottawa Citizen and a wide range of industry trade publications.
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