…providing network managed services to their customers, what they can do to make that more attractive to those customers is offer a financing program for all of the hardware that goes with that so the customer doesn’t have the capital outlay of financing the network if they’re installing a new network or revamping their network. With the lease-financing, a third-party financing company will provide finance to the VAR and ultimately to the customer so the customer pays a monthly rental fee for the hardware so they don’t have the big capital outlay. That will help our VARs in their sales efforts and to provide their managed services because it helps them to overcome the objection that some customers may have in the initial cost outlay if they want to revamp their network. The customer is less likely to delay a decision.
CP: Why is it critical to provide more assistance to VARs?
When I talk to our VARs, many of them are finding it increasingly difficult to compete with e-commerce. That’s really their No. 1 challenge. They offer installation services for their customers, so they charge separately for installation, so if they have to compete with e-commerce typically they may not make a lot of margin on the product if they have to match eCommerce pricing. And the new partner program rewards them for the value add that they provide by giving them the 18 or 22 percent discount.
It’s also about showing the VARs that they can also offer network managed services to their customers. They can manage the customer’s network for them, and that gives the VAR a recurring revenue stream and that’s a service that e-commerce can’t provide as well.
When I look at our numbers and the numbers I get from our distributors, the number of VARs out there is steadily declining, slowly but surely, every month, in fact. But I think there’s an important place for them in the market to provide these additional services that customers want. So that’s the No. 1 issue, how do I as a VAR compete against e-commerce and our solution for them is to look into providing these network managed services for your customers. And then we’ve got the other aspects of the partner program.
CP: So it’s providing a lifeline for VARs?
DS: That is correct, but it’s not just about providing a lifeline to the VARs. In doing that, we’re also providing an important service to the end customers, to the small business. If you have a small business … you need to be (an) expert in what you do and you shouldn’t have to worry about your network, and it shouldn’t have to be a case of…