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The Cloud & Technology Transformation Alliance is a joint initiative of Channel Partners and The 2112 Group. CTTA's mission is to be a forum through which all members of the technology value chain – IT vendors, service providers, distributors, resellers, agents and end users ‒ can discuss the issues of next-generation technology and systems, define the value of technology in business context, create best practices for adoption and application, and provide guidance for the business community on what comes next. This blog covers some of CTTA's work. More information is at http://cttalliance.com.

Google-Moto: A Catalyst for Convergence

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By Lawrence M. Walsh, CEO and President, The 2112 Group

The first 24 hours following Google’s surprise $12.5 billion acquisition of Motorola Mobility were filled with speculation about the true intent and consequences of the mega-deal. Some say Google is buying patents to fend off rivals Apple and Microsoft. Some speculate this is the first of several mega-deals that bring phones and software closer together – and still some believe the deal is about breaking Apple’s grip on the smartphone market.

All are plausible outcomes. One possible result that isn’t getting much attention is how Google could actually be creating a bridge between the IT and telephony channels, and becoming a catalyst of convergence.

At last week’s XChange conference, an event produced by Everything Channel, carriers, master agents and cable companies such as World Telecom Group and Comcast were talking about their desire to partner with IT solution providers and create new products to reach new markets. Everything Channel CEO Robert Faletra correctly noted in his keynote the growth of the cloud and the evolution of mobility. The direction is clearly the severing of the tether binding end users to their desk.

Now here’s the problem: The channel doesn’t have the relationships or the models to make a mobile world work.

Carriers (AT&T, Verizon, Sprint), cable companies (Comcast, Time Warner and CenturyLink) and hosting/service providers (L3 Communications) have designs on expanding their cloud presence and delivering more cloud services. IT vendors such as Cisco, Juniper Networks, CA Technologies, NetApp and Riverbed are banking on service providers redesigning their roles as market aggregators that deliver the cloud to greater numbers of customers.

For this new world order to work, service providers continually must expand their customer bases. That will lead to the need to expand infrastructure and applications, and that will mean greater sales for the IT vendors that create the underlying technology. Facilitating that growth, nearly all agree, is the channel, which will carry cloud services to the end-user.

It’s a grand utopian view of the future that has no basis in reality today.

According to research by the Channel Partners Cloud Convergence Council, a group formed by Channel Partners magazine and The 2112 Group, four out of 10 solution providers in the overall channel have no relationship with the vendors or carriers to make this vision work. In real numbers, this translates into the following:

Telecom carriers have very little experience or infrastructure for partnering with IT solution providers. Many carriers treat even their best technology partners as “agents," companies that receive referral fees for passing business to direct sales teams. Carriers have a legacy of keeping costs down because they primarily deliver services, so they’re reluctant to take on hardware or inventory. And, as costs creep up and market saturation pressures prices, they’re equally reluctant to surrender margin to the channel.

On the other hand, IT vendors are struggling to define their role in this value chain. They will expend tremendous effort and money selling to their cloud market aggregators, who will then turn back to them looking for help and subsidies marketing to end-users. Vendors have the necessity for marketing through and with their service providers, but they don’t want the expense.

Enter Google with its massive acquisition of Motorola Mobility. It was barely eight months ago that Motorola split into two companies – Mobility for smartphones and handsets, and Motorola Solutions for enterprise mobile computing devices and embedded systems. (Note: Motorola Solutions is unaffected by the Google deal.)

By bringing a smartphone manufacturer into its fold, Google will have a greater capacity for developing end-to-end mobile systems that leverage the cloud. Google already is doing this with its Chromebook partners Acer and Samsung. Motorola will give it similar capabilities as Apple in developing and marketing the iPhone.

This may lead to Google having greater influence over the carrier space. Google already attempted to buy wireless spectrum, and it’s no secret Google has designs on the unified communications and telephony space. By buying Motorola, Google could become the first truly transformed technology company of the future.

The Google-Moto deal will cause much pain and consternation within the Android community and mobility market in the short-term. While Google says Android will remain an open platform, it’s unclear whether existing partners – Acer, Dell, Samsung, LG, Toshiba, etc. – will continue to support the platform in the long term. However, Google conceivably could create products, services and a channel program that act as catalysts for future IT sales and development.

It will be a difficult transformation if any of this comes to pass. But Google just might prove to be the future of the cloud, mobility and the channel by solving some of the riddles that hamper progress today.

Lawrence M. Walsh is CEO and president of The 2112 Group, a technology business advisory service that specializes in optimizing indirect channels and partner relationships, and principle blogger at Channelnomics. He’s also the executive director of the Channel Vanguard Council and moderator of the Channel Partners Cloud Convergence Council . He is the former publisher of Channel Insider and editor of VARBusiness Magazine. You can reach him at lmwalsh@the2112group.com.
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