Will YOU be living in a cardboard box under the motorway in five years? Chinese kit-maker Huawei reckons one in four resellers will be out of business inside the next half a decade, such is the dwindling shelf life for the classic man-in-the-middle model. A report outlining the company's strategy predicted: "Within next five years, one fourth of the channels will disappear, and the remaining …
A company that clearly doesn't understand the channel, saying that the channel will be dead and buried soon.
The magical solution? Move from tin to solutions. Such a genius solution - but wait a minute...hasn't pretty much the entire channel been doing that for the last 5 years?
Catch up Huawei.
The advantages of having a channel model are for some the fact you don't have to:
- Employ the sales and field service people, so you keep a low headcount.
- Manage a huge warehouse network to store your unsold stock, and spares.
- Have lots of offices to support your local sales and field force.
- Manage individual dispatch to small customers.
- Operate a huge logistics operation to deliver your goods to your customers.
Still if your home market is in a place where land and people are cheap to employ, it probably does make sense. I've found that, usually, dealing direct with the manufacturer works for large orders, but smaller, and follow ons, the channel is the best way to go.
Add to the advantages of channel partners:
-Local knowledge of market conditions, regulations, business community and customs
-Expertise in certain verticals or solutions that tend to get lost in direct sales
-More of a "one-to-one" relationship for smaller customers who get put off dealing with Fortune 500 suppliers
Resellers go out of business all the time. They are mostly small, privately-owned businesses that sell out to other resellers as the principals retire, or fall off because they are under-capitalized, or they lose a couple key employees and their business goes south.
But lots of new resellers generally show up in the market to take the place of the departing companies.
More than 20 years ago, Cisco were training their partners that "we do not shift boxes, we sell solutions" -- those Chinese guys seem to just have discovered the warm water. There is much more to discover, such as sliced bread... :)
But yes, the prediction that many people will be unemployed is true. People need to get less lazy.
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