Channel needs a huge kick in the ass (weekend reading)

IT Business
3 Comments

Channel, which is the name stupid marketing people at big hardware firms call the collection of VARs, MSPs, resellers and computer builders, is dying.

(you might not like what I have to say)

Let’s not argue about that, we have the numbers to back it and the number is growing rapidly.

And it’s not just the assortment of Action Pack pirates, SPFs, fly-by-nights and other types I’ve shamed over the years on Vladville. Legit IT Solution Providers have taken a big hit in 2009 and it keeps on getting worse.

My check for a motivational speaches bounced. So I’m going to be honest with you.

Today was the first positive conversation with an MSP that I’ve had in at least two quarters.

Not positive in a sense that they are making a killing in the marketplace, but positive in a sense that they see some hope and ability to grow their margins through innovation and doing something new that their marketplace responds to.

You know what it doesn’t respond to? Everything that worked up until now: Large projects, large migrations, large network designs, huge purchase orders and massive upgrades. That stuff is in the past, along with a $12,000 server and $2,000 tape drive. Right under that $4,000 laptop.

In 2009 I’ve been sitting patiently, biting my lip as people pitch one doomed scenario of the recovery after another. See if you’ve said some of these:

SBS 2008 promises to be huge for our business..
Lot’s of interest in EBS..
I think Windows 7 will launch an upgrade cycle..
The economy is coming back, baby!!!

And the beat(down) goes on.

Why?

Because the taste and market demand have fundamentally changed.

You know how all those corporate IT jobs that people made 6 figures for watching a monitor and eating Cheetos never came back? You know how all those outsourced IT jobs are still in India and China? You know how people still seem to be buying those junk Netbooks left and right that the industry as a whole is losing a ton of money on?

Things change.

Profit margins change.

Demand changes.

We’re in the middle of it. And it’s a crying shame that with all the traveling, speaking and talking I’ve made it well into November for a single new idea to come to the market.

If you are waiting for the margins you used to get in 2005/2006 to come back, go look for a job now.

If you are waiting for an OS or device to bring back the margins you used to get in 2005/2006 to come back, go look for a job now.

If you’re thinking that expertise in the past is going to translate into success in the future, for the love of god, launch a training company and suck any money you can from the people dumb enough to think that doing shit the same way you did 5 years ago is going to make them profitable again tomorrow.

Now I have been working with a few friends in HTG and execs Autotask / ConnectWise / LPI / Kaseya on something new and while people are excited, there is a lot of hesitation to come to terms that things have changed. You’re as likely to uncover a business that is going to pay $50-$100 / workstation management as you are going to sell a $4,000 laptop.

Not saying that there isn’t a sea of people willing to pay $4,000 for a laptop, but that sea is drying up.

This isn’t a college thesis or a thought-provoking blog post… it’s just the way things are.

In order for “the channel” to survive, it has to change. It’s gotten you this far, right? But what now.

P.S. I wonder how big the market is for a “2012” or “The Day After Tomorrow” style book for the MSP industry…

3 Responses to Channel needs a huge kick in the ass (weekend reading)

  1. RandyS says:

    At the Connectwise Summit this month I heard more than one partner say “Yeah, we are just starting to get into this MSP thing.” What? I am already on to the next step, trying to figure out how you can sell “Free” and make money on it. I think “Knowledge Leveraging” is the ticket, but it isn’t going to bring in $130/seat. We are not selling Big Gulps or toilet paper to millions of people, and very few of us will be able to go mass-market to gain the economies of large scale needed to make the big bucks (present company excluded…)

    So what *is* the next big thing? You can bet that someone out there is doing it already. Probably tripped into it accidentally. Someone will discover them, label them a visionary, they will write a book and they will speak at conferences. Emulation ensues.

    Meanwhile, my eyes are open and my ear is to the ground. Is that a herd I just heard?

  2. Vlad Mazek says:

    As I told you in Orlando Randy, I’ll give you a call in December 🙂

    But honestly, there HAS to be a market for a fear based book. Hell, there is a crappy marketing program out there that has been selling like hotcakes for years now even though it’s lower in quality than a craiglist ad. How? “You know you’re afraid of marketing, I can help.”

    Wonder if a book on business strategy would be as popular.

    -Vlad

  3. Jeff Loucks says:

    Sorry to hear things are not on an upswing in the US. The market here seems to be on an up swing.

    I know this has been teh best quarter for us in a long time and we see people talking about technology aquisitions a lot. What is different is the lack of hesitation in the conversation. People are talking about now. Of ocurse we are in the business process assisted by technology business and not the commodity technology business. It seems different to me.

Comments are closed.