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Becoming More Than Hype?

By Michael Fair, MarketRace

Managed Services. I think that until recently these services were more hype than reality. I am really starting to see an interesting trend that is really starting to take off. There is a blending of hardware providers and service providers emerging around managed services.

Customers want one-stop shopping and hardware providers (routers, integrated access devices, phones, etc) want to add more value as compared to being an element of anothers service. Service providers need to bundle elements that encompass hardware, software, bandwidth and telephony type services into packages that are easily sold and provisioned. Hardware providers are aggressively working with service providers to enable this bundling to eliminate upfront costs and allow customers to pay monthly fees for service.

This has long been the case with carriers bundling routers into internet circuit monthly fees but I have recently seen this taking new forms. Hardware providers themselves are becoming service providers.

Full disclosure here in that I will be using current MarketRace service provider customer examples of this trend. Forval International is the U.S. arm of a Japanese company that manufactures wireless routers. In the United States, Forval offers a managed service where the wireless router hardware is provided free bundled with firewall, VPN, storage backup, print server and other services all for a fixed monthly fee. In the VoIP world, DoubleHorn Communications out of Austin, Texas, is providing free Polycom phones as well as the IP router as an element of the monthly service fee. The fee also includes managed internet service. The bundle cannot be broken and customers have flocked to the service due to the lack of an upfront hardware investment.

I see this trend gaining momentum as hardware providers take on a more active role in how their devices are bundled and become primary drivers of demand for the bundled services.

Michael Fair is a founding partner of MarketRace. He can be reached at +303 884 8174 or

mfair@marketrace.com

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