Distributors Take Their Logistics and Delivery Model to the Cloud

Brian Washburn

Brian Washburn

Summary Bullets:

  • Large distributors may seem disadvantaged when markets go to cloud; they have benefits of customer relationships and clout.
  • WAN providers’ cloud services are uncommon in distributors’ portfolios: may want to consider whether this is a conscious decision.

The distinctions between technology vendors and service providers used to be more clear-cut – until they weren’t any longer. We’ve all seen the impact of some leading technology companies in cloud, for example Microsoft selling Azure and Office 365 services on one hand, and the Azure-derived Cloud OS platform for service providers on the other. We’ve also witnessed how IBM and HP have reorganized their business around the cloud opportunity, aligning cloud-related software, hardware and services so they don’t cause friction with each other. VMware with its vCloud Hybrid Service is yet another example.

The demand for cloud services is growing rapidly and hardware sales aren’t. This fact puts large equipment distributors – companies like Black Box, CDW, Ingram Micro, Tech Data and Westcon Group – in an interesting position. These distributors don’t have the proprietary intellectual property of the equipment vendors. The consultative depth of systems integrators is not their core business. They also aren’t big infrastructure operators that are native to cloud, like carriers or data center providers. What they do have – besides highly efficient distribution and logistics – is a huge channel partner base, in some cases more than a hundred thousand resellers worldwide. Distributors also have the expertise and credibility to help out these channel partners, and they have the clout (up to tens of billions of dollars in annual revenues) to get things done.

This means that big distributors have the relationships and scale to chart their own course in cloud. Ingram Micro continues to build up an entire cloud marketplace, with more than 70 partners and hundreds of solutions. CDW offers several IaaS options, and aggregates more than a dozen sets of solutions from various SaaS providers. Tech Data offers a range of cloud solutions, and has just reorganized to target channels focused on SMBs. Tech Data is ramping up its relationships, most recently with dInCloud for virtual desktops, virtual storage and cloud servers. Westcon’s most recent cloud services partnering include PeakColo for Cisco Powered IaaS and collab9 for Cisco HCS unified communications services.

In Current Analysis’ cloud surveys, one of the big roadblocks to adoption we continue to find, particularly among mid-market/small enterprise customers, is the challenge associated with migrating to the cloud. This, along with concerns over availability and security with cloud-hosted applications keep many on the sidelines. Resellers and other channel partners, if incented, can become the trusted partners that provide migration assistance, and otherwise help clients adapt their business to the cloud. Large distributors in turn are the backstop that can help the channel get its customers to make the transition. Yet services from the likes of Microsoft, Intermedia and Symantec (and Amazon Web Services behind the scenes) are more common in these cloud portfolios – and solutions delivered by AT&T, BT, CenturyLink, NTT, Telefonica or Verizon Terremark are much less so. If they haven’t already, these and other cloud services providers may want to review whether they want reach out and take part in distributors’ cloud ecosystems.

About Brian Washburn
Brian Washburn is Research Director for Network Services at Current Analysis. Brian tracks the technology and initiatives surrounding carrier Ethernet, IP-VPNs, optical networking and applications closely tied to high-performance networking.

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