Change 2008: For Better and WorseBy Jessica Davis | Print
This year, 2008, was a momentous one in general and for the channel. It marked perhaps the most historic election of our lifetimes and a financial crisis and economic downturn that many observers say bears a scary resemblance to the Great Depression. These changes and others reverberated through the channel in 2008
This year, 2008, was a momentous one in general and for the channel. It marked perhaps the most historic election of our lifetimes that changed the way campaigns are conducted and a financial crisis and economic downturn that many observers say looks more like the Great Depression than anything that's happened since.
These changes reverberated through the channel, and the channel also saw some big changes of its own in 2008. This year was probably the most tumultuous in terms of vendor channel executive turnover something that some observers attributed to the pressures of a slowing economy. And this year marked giant turnarounds, such as Dell's inaugural year with its own channel partner program after years of proclaiming direct-only as its religion.
With that in mind, here's a look at some of the other events and the stories that made 2008 a truly memorable year.
Back in the early part of 2008, we were all still calling it an "economic downturn," but in October the stock market which had begun to trend downward in June suddenly fell off a cliff as the reality of the sub-prime mortgage crisis took its toll on huge financial institutions. Solution providers were only beginning to feel the effects of it when Channel Insider conducted its midyear outlook survey.
But the reality of it reverberated through the technology industry, with Intel dramatically cutting its outlook, and Sun Microsystems and other companies announcing big layoffs
For most of the year many solution providers said they'd yet to see the effects of what we now know is officially a recession.
And even after Wall Street's financial meltdown, solution providers were taking a wait-and-see approach to the situation, with one saying her approach was much like a "Storm watch" – her firm was getting ready for a crisis, but had yet to see if the dire predictions coming from the media were true. But the storm clouds were indeed gathering as IBM cut its inventory financing program relied upon by some small solution providers, even as the company introduced other financing programs aimed at helping end users make technology purchases.
And, other vendors and distributors were doing what they could to ensure sales didn't fall off a cliff too, offering advice to solution providers, upping their financing offers and sometimes just providing a positive look at the numbers to talk everyone off the ledge.
But reports have been piling up that point to a difficult 2009 ahead.
Still, as credit tightened up for many industries following the sub-prime mortgage crisis and subsequent financial meltdown on Wall Street, distributors, vendors and other lenders assured solution providers, that there was plenty of credit available to finance technology sales.
with companies such as Dell, IBM and Lenovo creating new offers to help smooth the way for new purchasing.
Meanwhile, the recession made software leasing in particular a more popular option among all technology buyers, not just the customers of solution providers.
In spite of all the financial and economic turmoil in the world, with shockwaves felt by many industries, including technology, plenty of other things happened in the channel in 2008.
Web 2.0, Green, the Talent Crisis, and Dell
- As Web 2.0 and social networking technologies made their way into the mainstream, more vendors and solution providers picked up on them and the opportunities they offered.
- More technology vendors, industry organizations, distributors and solution providers embraced green technologies and the cost savings they can offer. For example, EPEAT offered a green product rating and the MSP Alliance launched a Green IT certification
- Solution providers continued their plea for help in recruiting qualified employees – something that has ranked among their top concerns, even as the unemployment rate has climbed in 2008 to its highest level in decades. Some IT
- Meanwhile, many in IT agreed that certifications have continued to lose their value as a measure of an employee's potential success on the job – but that some IT certifications do still matter.
- Dell, a company that had proclaimed direct-only sales as its religion became more agnostic in 2008 with the inaugural year of a formal channel program.
Vendor, Parter Controversy
- But the year was not without controversy between vendors and channel partners, including Dell, which was still trying to figure out how this whole channel partner relationship thing works. For example, Dell was surprised that some solution providers felt threatened by its plans to take its direct managed services offering to the New York market and beyond. While the company said it wouldn't compete with Dell-certified MSPs, it said that other MSPs were fair game.
- HP raised the hackles of many a solution provider when it struck a deal with CDW for salespeople funded by HP and employed by the direct market reseller to target small businesses.
- Symantec also felt the ire of solution providers after its Chief Operating Officer at the time, Enrique Salem (who is now the CEO), made what some considered some very anti-channel comments to financial analysts during a presentation to them. Then channel chief Julie Parrish quickly came forward to do damage control.
- Then, Google's move to cut the prices of Postini rankled many a solution provider, causing many to say that they planned to defect to other vendors.
More Vendors Get SAASy
Aside from Dell's direct managed services offering, a handful of vendors also made moves to introduce their own direct infrastructure/SAAS or MSP services to end users, from Microsoft's hosted Exchange and Sharepoint to its Azure, Symantec's long-delayed SAAS offering. Finally, a few technologies emerged as strongholds – potential hedges against the recession -- for solution providers going forward. They included storage technology and video conferencing.