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Peter O'Neill

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Peter O'Neill is Vice President and Principal Analyst at Forrester Research. His research and advisory is targeted to technology marketers including those who work in channel marketing. He services global clients from his home office in Stuttgart, Germany.
By | Peter O'Neill 28th August 2012 15:05

Tech disties and telcos lock horns in cloud death match

Spread the love, not war

The friction and competitiveness between IT distributors and the telecommunications vendors in the new cloud-based world is becoming apparent.

While working on some research about the cloud-driven evolution of tech wholesalers, Forrester Research interviewed many tech vendors and distributors in the last months, and curiously many drew a parallel between the business models of telcos and tech distributors, as both sell cloud services.

This left us analysts scratching our heads. Why should they be competing at all? Our view is more that it makes good business sense to actually exploit each other’s resources and pursue joint go-to-market initiatives. By partnering, each can focus on doing what it does best to serve customers.

Telcos’ reach, ready infrastructure and existing customer bases provide a solid cloud foundation:

  • * Back-end infrastructure: Telcos’ robust network and data centre infrastructure is critical to setting up and delivering cloud-based services swiftly and without massive additional investment. Moreover, their businesses are well-suited to annuity models.
  • * An existing base of enterprise customers: Although telcos aren’t considered a strategic enterprise provider in most instances, their access to a large base of qualified enterprise accounts and existing relationships potentially provides a very good foundation for cloud solution sales. And distributors’ access to partner networks with strong customer-fronting skills and knowledge is exactly what telcos lack.

  • * Large reseller networks and end user touch: Tech distributors’ large network of resellers can help telcos reach out to customers quickly and more efficiently. These resellers understand the needs and business challenges of enterprise/SMB customers and can act as a credible trusted advisor.

  • * An understanding of legacy IT infrastructure: Distributors and their partners typically have a good grasp of their customers’ legacy IT infrastructure and can help them customise and integrate cloud solutions in a more tailored and effective way.

Distributors, along with their partner networks, could easily augment telco cloud offerings through value-added services such as enhancing competencies in business management, marketing, pre-sales, solution design, tech support and other technology services.

Viewing one another as competitors in the crowded cloud solutions landscape is short-sighted. By throwing these perceptions aside and considering partnerships to strengthen their respective offerings, telcos and distributors could unleash a far stronger overall solution.

What do you think? ®

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