The game is changing…
Posted: May 6th, 2009 | Author: Garrett Smith | Filed under: VoIP Commentary | 5 Comments »A day or so ago I read a post over at No Jitter by Matt Brunk that cast the IP communications channel as an eroding numbers game. The post was interesting to me as I’ve experienced the continual squeeze on margins through the years. Plus I’ve witnessed the frustrations of channel sales and marketing in today’s environment from working closely with many a manufacturerand service provider.
While Matt’s take on the current state of the IP communications channel is very real, his reasoning for it and resolution for improving it are off.
The present issues within the IP communications channel is not due to a numbers game as Matt suggests, but due to that channel game changing. All due to the Internet.
The Internet has had a profound effect on how businesses procure telecommunications services and the low cost scale companies supplying these services can achieve.
In short, it’s a perfect mixed for the new and nimble. A disasterous mix for the old and slow.
Businesses are no longer going to their Yellow Pages or local VAR for their communications needs. They’ve got the Internet. So they go there to do their research – and their shopping.
This is fine if you were prepared for it. But many a telecommunications VAR and even data networking VAR wasn’t (or isn’t).
It’s not just the VAR’s though, it’s the whole rest of the channel. Manufacturers and distributors on the whole have been slow to embrace and adapt. They’ve clung close to the ways of old, ignoring or even denying the fact that their business would need to change and evolve.
Naturally newer entrants have emerged and created new models that leverage all of the benefits of the Internet to deliver comparable VAR experiences to customers at a scale physical VARs could never achieve at the margins which currently exist.
Customers get everything but the hand shake and butt crack. All for a fraction of the cost.
It works for end businesses, thus causing the game to change. As such the traditional channel way is no longer the right game to play.
Sadly, the answer to fix the woes that are present for many within the IP communications channel is not in value and price deflection as Matt suggested. The answer lies in the channel coming into alignment with the way end businessed are purchasing communications products and services.
The game is changing and those within the channel will need to change.
More to come in the future…
Could not agree more with your reasoning in this post.
The internet is a game changer, especially for the telecommunications industry. I would bet that almost 100% of business owners/decision makers considering either a new telecommunications system or purchasing additional hardware for an existing system will go to the internet. They may end up buying locally, but the price for their services is definitely going to be inline with the industry.
My company, http://www.AvadTechnologies.com get virtually all new business from the internet, the lone exception being referrals.
@ Neal
I’ve watched you closely Neal and can say that you’re one of those that “get it” and undoubtedly your success is due to that fact.
The real struggle, though, seems to come from the top and middle portions of the channel…more on that to come.
Garrett,
Social media tools have really leveled the playing field in terms of reaching customers. As we have seen in the current economic climate, those companies that can’t or won’t adapt will not survive. Actually the larger the company the more at risk they are because of the difficulty in implementing change.
I also think there has been a huge shift in the general perception that big companies are safer than smaller companies.
[...] Smith on VoIP says that the game is changing in the IP communications realm. [...]
You mention people ARE going to the web to look for companies instead of yellow pages etc. It is hard educating business owners to this and to encourage them to grasp the internet market by the horns and use it to their advantage.