Is Channel Distribution Merging in the Cloud?

By Khali Henderson Comments
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Merge?

Nearly all sources said the relationships between master agents and distributors, if any, were more likely to remain collaborative than competitive — at least in the short term.

"They would be best to work as collaborators today as what they provide is still very differentiated. The barriers to entry into each other's business based on each of their models is high," said ShoreTel's Arman.

Matthew Stevens, vice president of product line management and professional services for Cbeyond Inc., agreed. "'Co-opetition' may be the answer to the master agent/distributor relationship. All parties need to stop viewing the market as a zero-sum game, or a win-lose proposition. As technology advances and solutions change and at an ever-increasing pace, no one company can do it all."  

Not everyone is optimistic that the relationships will remain collaborative, however. "[Their relationship will be] collaborative to an extent as some distributors outsource to master agents, but I see it becoming increasingly competitive," said Stephan Tallent, director MSSP Americas, Fortinet Inc. "Distributors are operating in a hotly contested, low-margin business but have strong cash flow and resources; they are investigating value-added services to increase channel wallet share. Many have added private cloud and telephony services to their portfolios as well as training services."

A third option is merger. "If distributors and master agents possess the right skill sets and have qualified people, it will make sense to consider a merger," said Greg Praske, CEO of telecom agency ARG. "This business cycle appears to be much more intense and growing rapidly. There simply may not be the time to build in and thus [they] may have to buy it."

Nearly all sources said the most likely scenario would involve a distributor buying a master agent by virtue of the distributor's greater size and the master agent's narrower focus. "I think a distributor might look at the acquisition of a master agent with strong technical sales capabilities, process management software and/or a solid back office to check the telecom box," Fortinet's Tallant said. In fact, Tech Data already has done this, by bringing  in a wireless master agency as the basis of its TDMobility unit.

Meanwhile, both master agents and distributors are going to continue traveling down their own pathways to the cloud.

Khali Henderson is editor-in-chief of Channel Partners.
Twitter: @khalihenderson
LinkedIn: www.linkedin.com/in/khalihenderson


MORE INFORMATION

Hear more from leading master agents and distributors on channel enablement in the Keynote Roundtable, "The Future of Distribution in a Converged IT & Telecom World," at the Channel Partners Conference & Expo, Feb. 27-March 1, in Las Vegas.

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