Resellers that aren't doing well today need to take a long, hard look at themselves, warned Canalys CEO Steve Brazier during his opening keynote at the analyst firm's flagship EMEA channels event.
His sentiments echoed those made by Computacenter CEO Mike Norris at this year's European Channels Leadership Forum in London - resellers, those unglamorous "tin shifters" or "box movers", are now outperforming and outgrowing global systems integrators and even established vendors.
Brazier made the point that anyone who invested in a reseller five years ago would have now tripled their investment. The industry's largest players such as Computacenter, Bechtle, CDW and Atea continue to prove their worth to investors with impressive financials and bold expansion strategies.
But, while Brazier set an optimistic tone in his keynote, the event carried some unsettling undertones as rumblings broke out that some of the industry's biggest players are about to undergo significant change.
Channel Partner Insight spoke to channel partners to get their take on the industry's biggest talking points from Canalys' Channel's Forum.
HP and Lenovo controversy
When HP's incoming CEO Enrique Lores and Lenovo's COO Gianfranco Lanci took to the stage for an open Q&A, partners in the audience used it as an opportunity to demand answers.
Both vendors have recently been accused of undercutting resellers and distributors through offering aggressive pricing through their online stores.
Partners could anonymously submit questions to both Lores and Lanci in an open Q&A. The questions about HP and Lenovo's apparent undercutting practices by far received the most "likes" out of any other questions put to the vendor executives.
Channel Partner Insight spoke to several partners at the Canalys event and asked them for their take on the accusations levied against HP and Lenovo.
Most partners said they were confused and puzzled about where the accusations have come from, with some saying they don't have any substance.
Gilles Perrot, general director of French Platinum-level HP partner C'PRO, said he hasn't seen any pricing conflict with HP's Online Store whatsoever.
Computacenter's group CCO, Kevin James said that, from his perspective, "no one's really complaining about it".
He did add that the pricing models from HP and Lenovo are extremely complicated, and issues could arise from smaller partners not understanding how special bids work or how to get discounts from vendors.
"This is probably where the source of the challenge is. It's not a problem for me, but for the smaller resellers, pricing and the complexity of the pricing models - special bid pricing and how you get to a price for the customer - it's really complicated. I would suspect, and I have no evidence of this, but the people asking those questions, even though they think they're asking a fair question, they just don't know how to get the prices and they don't really understand it," he said.
"The bigger resellers know how to get that price, but the smaller ones don't. It comes back to: it's too complicated."
Nevertheless, Lenovo and HP opened investigations into the issue, with Lenovo's EMEA channel boss claiming she had already found one case where its online store was undercutting the channel.
Tech Data's rumoured sale
Rumours emerged that Tech Data had been approached for a $5bn takeover during the Canalys conference.
Brazier unexpectedly returned to the stage, cutting the walk-off music that began to play after his keynote, to relay the news to the channel audience.
He said it was another example of bustling investor interest in the channel.
Speaking to CPI about the news, several channel partners pointed out that Apollo Global Management, which was identified as the buyer, is the same PE house to make an offer for Tech Data competitor Ingram Micro in December last year.
"I would imagine it creates a little bit of uncertainty among Tech Data employees," said one channel exec. "But they should tell their people that it's not a bad thing that someone wants to spend $5bn on you."
Another speculated that going under private ownership will allow Tech Data to make some major changes without having to deliver on short-term results.
"Think about Dell, going private gives a chance to make some potential transformational changes without the pressure of quarterly results. To then come back and go public again could be the master play - to delist, make the changes then go public again."
Another partner exec played down Brazier's notion that Tech Data's offer is a sign of growing interest in the channel.
"You've got to remember: every time someone makes an acquisition, someone's making a disposal," they said. "So someone is excited about Tech Data, but someone else thinks they've got a good price for it. Everyone gets excited about acquisitions, but it also tells you that someone's selling."
HP workforce cuts
Incoming HP CEO Lores told partner delegates that reducing its workforce by 7,000 to 9,000 staff will speed up decision making and help standardise its business globally.
Partners that spoke to CPI agreed. Perrot from C'PRO said that HP's restructure will likely benefit single-country resellers.
"We are working with country managers which are all staying the same. It is only the regional layer that is being affected," he said.
"I have spoken to the new CEO [Enrique Lores] and what he said was quite clear: there are too many people in HP who are able to say ‘no'. When you have four or five people in in the management who are able to say no to a single decision, it slows things down. You lose a lot of efficiency, so I can understand why HP did it."
Global system integrators moving in on hardware
If there's one consistent message from partners at Canalys Channel's Forum, it's that there's a noticeable energy and optimism in the industry.
Brazier made the point in his keynote that global systems integrators such as Accenture, Capgemini and Atos are becoming more interested in growing their hardware businesses and entering into competition with the channel.
The Canalys CEO also said GSIs are in a race with the channel to dominate in the cloud space. He said that today Accenture is probably the world's biggest reseller of public cloud.
But reseller bosses told CPI they are confident about pitting their hardware businesses against global GSIs like Accenture.
"There's energy, and business is going really well and the industry is booming," said Computacenter's James. "There's a positive vibe in the room from everyone. The point Steve [Brazier] made about the valuations of GSIs and resellers, actually we've done some of that analysis ourselves and it stacks up."
"If you go back four years, there was a really weird competitive situation with GSIs. You'd have a big deal with a big customer and very thin margins and we'd think ‘why would Accenture be interested in this?'
"As ever, GSIs do what everyone does with the product reseller business - they simplify it in their own minds and say it must be straightforward and easy. But what they don't get is there's complexity inside this business.
"It's a complex business, which is hard to execute; you have to do it properly."
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