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The technology
industry has shifted sharply to consumer electronics such as smartphones,
tablets and mobile applications—even as many analyst firms slash their PC
forecasts. Today’s business travelers often leave their laptops at home,
preferring to carry just a tablet and a smartphone.

The advent of mobility, consumer
electronics and cloud computing in the enterprise is changing how the
technology industry—and business in general—works. When any client device can
access information in the cloud, why do we need PCs?

You may think that a company once known as Computer Discount Warehouse
is worried about this trend, but that’s not the case. Instead, direct-market
reseller CDW is experiencing strong product sales at the same time that it’s
making inroads in the technology services business.

Now,
with new CEO Thomas Richards at its helm, CDW plans to put more investment
dollars into building up those services.

“There
are a lot of opportunities for growth,” Richards told eWEEK and Channel Insider. “There are opportunities in
other services we can offer customers. The world of technology is about
change—dynamic change.”

CDW is on the
right track with its services strategy, according to analyst firm Gartner. Vice President of Research Tiffani Bova told eWEEK and Channel Insider that
direct resellers, much like IT distributors, are in an ideal position to serve
as cloud services brokerages. They have the vendor relationships, the long
lists of customers in markets that are interested in cloud computing and the
capital to pull it all together.

“Cloud
service brokerages will be the ideal role for direct marketers to consider
while they continue to maintain their existing retail business and decide how
to remain relevant in new delivery models as telcos and others move into those
businesses,” she said.

Reassessing
Strategy

Richards
joined CDW as president and COO in 2009, and was the heir apparent to then-CEO
John Edwardson. In October, Richards moved into the top job.

Though
Richards has spent his 33-year career in technology, many of those years were
not at a PC maker or an IT distributor. In fact, he spent 19 of the early years
of his career at a very different kind of company: Bell Atlantic, a local
telecommunications carrier.

One might argue that Richards’ compute and
telecommunications experience gives him the right combination to tackle an IT
market that is changing to embrace services and managed services in addition to
product resales. Richards pointed out that the convergence of compute and
telecommunications has been going on for quite some time. He said that several
older technologies, such as shared resources and virtual private networks, are
the predecessors to modern services such as cloud computing and virtualization.

After
becoming CEO, Richards immediately embarked on a reassessment of CDW’s
strategy, looking to expand the company’s resources in IT services, cloud
computing and mobility. Though he admitted to the reassessment, Richards
downplayed it. He said that it’s been more of an evolution than a revolution,
as the changes have been going on for quite some time.

Gartner’s
Bova seems to agree. She said that CDW and other direct resellers, such as
Insight and PC Mall, made initial moves in the services direction through
acquisitions a few years back, with Insight buying Calence, PC Mall buying
Wareforce and CDW buying Berbee. But those were just initial moves, she added,
and none of the direct resellers has really
taken the ball and run with it on managed services.

However,
Bova pointed out that these resellers don’t necessarily have to switch over
from product sales to service sales. “Direct marketers are highly tied to
volume rebates, co-op funds and other incentives that manufacturers provide
based on the large number of products they touch,” she said. “They’ve been
expanding that for a long time with close-to-product services such as support,
maintenance and warranty.”

Now
these companies need to decide where they want to take their business. “What
percentage of revenues do they want to have coming from different businesses?”
she asked. “What do they want to be when they grow up?”

With
the accelerated interest in and adoption of cloud services, it will become more
and more important for the channel to invest in skills and capabilities that
will ensure they can remain relevant in this new supply-chain model.

In
fact, CDW has already hired close to 300 people this year, with most of them
tied to sales or expanding service delivery capabilities in the cloud computing
and mobility markets. CDW also resells Apple products, including iPads, so there’s
money to be made in both sales and services around these devices, Richards
said.

“We
are clearly seeing more demand for iPads,” he added. “It was pretty amazing to
watch the growth go from zero to 100, so to speak, as iPads became part of what
people bring to work.”

Are
tablets a fad? Not according to
Richards, but the CEO does believe
there are two distinct classes of users: individuals who consume information
and ones who create it. Tablets are loved by people who consume information, he
said. Maybe that’s why Richards leaves his iPad at home when he goes to the
office and takes it with him only when he travels.

Clearly,
there is still a reseller market for IT products. “Will the resale model go
away any time soon? Absolutely not,” Gartner’s Bova said. “They don’t need to
go all the way over to the cloud.” However, she added, if resellers want to
take that direction, they are in a great position to do so with their existing
real estate, data centers, SMB (small and midsize business) and enterprise
relationships, as well as their vendor ties.