Q: What are the dominant reasons for the growing pressure on margins?
DS: The Cloud is hitting them. I don’t want to talk about that too much, but there is no doubt about that. It’s the Cloud and purchasing behaviour of customers.
Some technologies are becoming heavily commoditised and you really can’t add value to it. An example would be a switch. It is highly commoditised. But that changes when you are taking a solution to a problem. Say, a CCTV solution that has IP cameras, has fibre, has copper cabling, switching, DVR type recording capability underpinning it – there is a switch in it, but then there is also a whole solution – that’s a much better selling proposition for the reseller.
Resellers that are focused on always doing everything themselves, and not reaching out to people with knowledge – their days are numbered. I would encourage all resellers to partner with people like us. We don’t claim to be experts in everything. We are not experts in storage for example. Some distributors are. But we are experts in Wifi, networking, telco and security.
Resellers have to partner with experts to get the knowledge and then take that to your customer base. We are going to continue to see Wifi push the boundaries. Now with gigabit access points, that’s huge. That’s going to change how we connect, the speed and the demands we put on our networks. Obviously, a gigabit access point has to have the infrastructure in the backend to support it.
Another reason is fibre to the home which is going to have a large impact on NZ and how we use technology. And also what our expectations of technology are. Most homes will get speeds better than we do at work. So expectations are going to change.
Security is going to continue to put pressure on networks. Intrusion prevention and making sure that networks are robustly managed and secured, that is going to get bigger and bigger.
There will be some consolidation in the reseller space in NZ. That would be my feeling. What, how and who, who knows, but I would say that the number can’t continue like this.
If you think of a medium enterprise – they need to make sure that if they don’t have a CIO that they have got the right strategies in place. That is an opportunity for resellers to make sure that they are not seen as an ambulance at the bottom of the cliff for their customers. That they are seen to be proactive and strategic about how they engage. That’s really important. Resellers who do that will do very well.
Storage is storage – whether it is in the cloud or on-premise. That is getting cheaper and cheaper and cheaper.
Q: What are some of the things that you are doing to counter and move with the changes in the market?
DS: What we do very well is by identifying and merging technologies. So we look at cutting-edge new startups out of Silicon Valley. We identify them, their commercial potential and then take them to our reseller base. We do that on an active basis. We are constantly look at what’s happening globally, who is doing well and who is not doing well, why aren’t they doing well and making sure we are aware of all the developments.
Good example is Unitrends which is a brand of ours. It is a backup/storage device. That is a start-up, venture-capitalist funded, going great guns overseas. We brought that to NZ and Australia. And we are getting some good traction with it.
We are taking some of these emerging technology brands and introducing them to our resellers so they can pitch them to the right opportunities.
Our focus in identifying them is that they should be global brands – that is important to us. Then, the technologies have to fit in our pillars of excellence. Usually they do. We need to be able to add value to them.
New technologies also have to complement what we currently do. There is no point setting up a whole new sales force or overhead structure for a product that does not fit. It has to fit in our available technologies.
We have also developed a brand called Delve, to help companies with BYOD. It is an identity agent. If you turned up with your personal iPad on your work network, the network would know that it is your personal device, and apply policies in both content filtering and applications as if you were on a domain machine. So even though it is a personal device, it will not allow you to do what you would not otherwise do on a domain machine.
There are expensive end-user agent solutions available, but ours is fast, simple, cost effective and does the job fairly well. We will look to develop more solutions. If an opportunity presents, and there is nothing in the market that fits the gap, we will do it ourselves.
Then there is the Cloud.
Last November, we bought a half share in a datacentre provider called AO but we aren't trying to compete with Amazon at all. We know they have a place in the market.
What we are trying to do is provide a point of difference. So our methodology for billing is different, and provides a better way for resellers to take cloud services out to their customers.
Cloud will continue to challenge the way infrastructure is purchased and how it is used. It is going to continue to push things.