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State of play: Concern colours slow start

Brian Karlovsky | March 25, 2014
It isn't easy out there. Over the past quarter, some resellers have hit the wall and consolidation is rife at all levels of the channel, according to key industry players who also expect to see more big deals like the Dicker Data takeover of Express Data and a further squeezing of margins, the latter contributing to some poor results for some tier-one resellers.

"The industry is hurting the industry, not the economy. The economy is strong. Very strong. The industry needs to learn to shut up and talk to their customers in a sensible way again, not paraphrase ridiculous nomenclatures that don't even make grammatical sense, that make the deliverer sound stupid, and the customer feel stupid. It's a nonsense."

WhiteGold Solutions commercial director, Leigh Howard, said resellers needed to be prepared to be innovative if they want to thrive in a "flat" market. "Some resellers have gone into receivership and some have reported the poorest results they ever had," he said. "Looking at that you would think it's all doom and gloom, but resellers are beginning to figure it out.

"Gen-Y is becoming the future decision makers and it's those new fresh resellers that are prepared to work with challenger brands that will succeed. The losers are any resellers that continue to sell the same stuff from legacy tier-one vendors which no longer offer as much value or technology leadership as they once did."

The winners are...
In the winners' margin, Howard notes the usual suspects: "Big Data, mobility, and storage are not going away but people need to find better ways of managing storage and better ways of analysing Big Data. "All the early players in MDM are struggling big-time and they missed the big opportunity of merging apps. Hot for us is converged infrastructure in the datacentre."

Howard said consolidation would permeate the industry in the coming months and joined the chorus of tech leaders calling for acceleration of the NBN, while keeping a watchful eye on a return of the tech bubble after some very big valuations.

"We will see more consolidation at every level," he said. "More vendors buying vendors, more distributors buying distributors and more resellers buying resellers or going out of business," he said. "And the NBN continues to be a bit of schmozzle."

Anittel managing director, Peter Kazacos, said it was interesting to see telcos posting generally strong results, while hardware and software providers had not fared as well.

"The other interesting thing to see was in the datacentre space," he said. "It was surprising not that profits hadn't increased but that the increase in revenue was quite small. We may get into a position of oversupply in the datacentre co-locations space."

Kazacos was pleased to see Telstra chief executive, David Thodey, indicate that he would look to make the company a worldwide player.

"It's important to have Telstra match it with some of our American counterparts. It's a sound move." In the ever-growing area of Cloud, Kazacos does not see a direct leader. "With Cloud, it's not a situation of if, but when, and how do we store it?," he said. "You can also host apps in the Cloud and telephony as well, and Voice over Internet Protocol [VoIP] will take off. The key is in providing a full service rather than just a commodity. I like the fact that Cloud providers from overseas won't get too much of our market space unless they can provide the integration."


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