A Tale of Two Different Channels

By Howard M. Cohen
two channels

Imagine stepping into an alternate universe, a separate reality where you attend a major channel trade show, but Microsoft, Cisco, Hewlett-Packard and others aren't there. Nobody talks about "distributors" or even "solution providers." Instead, the major exhibitors include companies such as Vonage, Telstra, Nextiva and GTT. 

Instead of distributors seeking relevance in the age of the cloud, you are introduced to master agents seeking relevance in the age of the cloud.

Instead of solution providers working hard to differentiate themselves from all the other solution providers, you find sub-agents looking to sell solutions from providers that are completely separate companies.

And "the cloud" is referred to as "new." This just doesn't look like Kansas anymore, Toto.

The Other Channel

Welcome to the Cloud Partners Conference held last month by Informa Exhibitions. More than 2,500 channel partners but very few that the typical IT solution provider would recognize. Nor would they recognize us.

These are partners in the telecom channel.  Major carriers like Verizon, AT&T and others, not wanting to carry tens of thousands of receivable accounts have enlisted a smaller group of master agents that, like Microsoft licensing solution providers (LSPs), formerly known as large account resellers (LARs), are the only ones that can order and sell carrier services. These master agents, in turn, have recruited hundreds of sub-agents—which, like our VARs and integrators, resell carrier services and related services.

These are the "voice" guys who any "data" guy will tell you don't know data, and the voice guys say that data guys don't know voice.  But that's all poised to change.

The Newfangled Cloud

A data guy from the IT channel stepping into this alternate universe immediately feels like they've gone back in time.

The first headline in the opening keynote says "The Cloud Means Business … Or Does IT?"—which is followed by the astounding bullet: "2015 is the Year of the Cloud." So what happened to the last 10 years of the cloud?

Sub-Agents are seeing the ground move beneath their feet. Previously, in the time when all the services they sold were installed, provisioned, deployed, implemented and integrated by the carriers that produce them, the sub-agent never worried about the installers bungling the job. They simply sold the service and moved on with full confidence.

Now, with this cloud thing, they're not exactly sure who is going to do the implementation.

Master Agents have a huge advantage over the IT channel distributors. It's often difficult to understand what value IT channel distributors add to cloud services, so many IT channel partners just bypass them and go directly to the cloud service vendors. The carrier services that the master agents facilitate for their sub-agents are the actual connection to any Internet-based services, and the sub-agents can't go around them directly to those carriers.

Carriers are busily partnering with Cisco and others to provision Internet-related services, including cloud services they can deliver themselves through their master agents and sub-agents.

It's all much tighter-knit around cloud, which is seen as a high-demand workload that will support the sale of ever more bandwidth, the key product everyone is busy selling.

Friendly Faces

For the IT channel partner attending this Cloud Partner Conference, there were some friendly faces in the crowd. Mozy was there representing EMC. Autotask, Datto and Rackspace were exhibiting and participating in the panel discussions. CompTIA's Carolyn April provided insights from her research.

Perhaps the most interesting visitors from the IT world didn't show up on the sponsor lists but did appear in panel discussions. Both Ingram Micro and Tech Data are sticking their toes in the water here in the telecom world. They have a lot to say about the cloud, and hope that these channel partners are listening more closely than the IT channel partners they usually serve. Perhaps there's an opportunity here for them to achieve that elusive relevance in the cloud.

But then you have to wonder how that will sort out with their large, well-entrenched telecom counterparts, the master agents.

Convergence Ahead

It is inevitable that these two worlds will collide. In the IT channel, the value proposition for infrastructure is rapidly being eroded by the transition to infrastructure as a service, or IaaS. The day of the hardware salesperson is all but over. In the telecom channel, those who sell well are coveted resources who are proud to be driven by incentives. The IT channel has the services the telecom channel sub-agents need to complete the cloud sales that drive more bandwidth sales.

The overlap between these two worlds is receding, replaced by complementary interests that create a need on the part of each for the other.

Stay tuned to Channel Insider for more insights inside this increasingly integrated environment.

Howard M. Cohen is a 30-plus-year IT industry veteran who continues his commitment to the channel as a columnist and consultant.

This article was originally published on 2015-10-06