Adtran Moves to Woo MSPs to Gain Market Share
The fundamental difference between resellers and managed service providers is the degree to which they ultimately need to focus on product quality.
While resellers would always prefer to sell the highest quality product available in any given market segment, everything from the amount of margins they might make to the customer preference can influence that decision. In contrast, a provider of a managed service more often requires the highest quality product they can get in order to minimize downturn. After all, if the service isn't available, the MSP doesn't generally get paid.
With more solution providers than ever moving to embrace managed services as a way to generate more profitable revenue, Adtran sees an opportunity to gain market share at the expense of rivals, such as Cisco. To that end Adtran has launched its ProCloud Subscription Services initiative through which MSPs can deliver both wired and wireless networks where the cost of acquiring the equipment is essentially embedded within a recurring monthly management fee.
While the company has been able to contend with Cisco when it comes to competing for market share among providers of telecommunications services, Adtran has always had a more limited presence in the channel. But with more solution providers deciding to provide managed services, the supplier of networking equipment sees an opportunity to broaden its channel base, Scott Stewart, director for ProCloud services and solutions for Adtran. "In a lot of ways, this is simply an expansion of an existing business model," said Stewart.
One of the first MSPs to jump on the Adtran bandwagon is Speros. According to Speros Chief Operating Officer Keith Fletcher, the MSP plans to continue to support switches from other vendors at the request of customers. But any time the solution provider delivers a managed service, it will be based on switches from Adtran, said Fletcher. The primary reason for this comes down to the performance of networking applications and the cost of support associated with Adtran networking equipment versus that of other rivals, said Fletcher.
"There are a lot more latency-sensitive applications," said Fletcher. "The quality of service we need to provide is critical."
As IT organizations move to consume more network services, thanks to the rise of mobile and cloud computing, they need to upgrade their switches more often, he said, adding that as a result, it's more cost effective for them to essentially lease those switches via a managed service. "The days of buying a switch every five years are over," said Fletcher. "Customers now need to upgrade their switches every two years."
Naturally, it remains to be seen just how much ground Adtran can gain on rivals such as Cisco and Juniper Networks by more proactively engaging MSPs. However, what is clear is that as MSPs continue to gain more influence in the market, they are emerging as a class of buyer of IT products that happens to also get rewarded for driving up consumption of networking equipment and services.
Michael Vizard has been covering IT issues in the enterprise for more than 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.