Meltdown

Meltdown

People come and people go, as do products, trends in the market and prime ministers but Martin Hatcher seems to be one of life’s constants. Having played a key role in the development of the independent comms channel since market liberalisation in the early 1980’s Hatcher formed MTV Telecom in 1989 as a specialist systems distributor, a position he has maintained for the company ever since.

MTV telecom was one of the early movers in the convergence market back in the late nineties when they took on the Network Alchemy range of systems. The experience gained has paid off and last month the distributor took another bold step by adding a soft IP PBX from Swyx to their portfolio. Hatcher explains.

“We see the market as being overcrowded. Today there is a painful lack of focus and I fear we are approaching a watershed in the evolution of the channel which may result in a number of companies – vendors, distributors and resellers, not surviving for too much longer.

For example, there are too many distributors selling the same product. Vendors have lost the plot in imagining they will gain market share against their competitors by the process of simply adding another distributor into the mix.

Some people would comment ‘Yeah, but it has always been like that’ but today it is different. The difference is that the technology has changed. By this I mean that the onward march of convergence towards applications selling has created a huge need to offer support and value add to the reseller channel. The trouble is that some vendors and distributors are treating a convergence sale in the same way as they would treat a commodity sale and this has consequences for the channel. Ultimately you can’t afford to do this the cost model cannot be sustained where everyone is selling the same or similar products. Eventually these miscreants will realise the error of their ways but I fear that for many it may be a case of being too late.

Vendors are pumping marketing contributions in to their new distributors but are beginning to realise they may have been sold pups when the distributor fails to deliver the volume required. The reason these distributors are not delivering for the vendors is that they do not have the resources to focus on the new additions to their portfolio or, in some cases I have heard of, do not even have the intent to try and deliver the results. They just take the vendors money and run – a regrettable business practice.

This is why I say we are at watershed. For the first time in years we are going to see the market fundamentally change. Resellers with supply and service agreements with vendors and distributors for certain products will not see those agreements come to fruition and their own investment in terms of training and accreditation will not be returned as there is no substance to the offering.

At the end of the day the distribution business can be a commodity distribution business – and there are some hugely successful models particularly in the data market, when geared and structured towards high volume and low margin. That however is not where we are positioned with voice and data convergence; where we all need sufficient margin to re-invest in the channel. This has to be the reality and not just sound bites.

I foresee at least two distributors that will be either acquired or dismantled in the short term because they can no longer continue to operate as a commodity supplier within a convergent environment. Likewise we see vendors under huge pressure to perform, hit targets and gain market share. They have been sold stories about results, but the stories are not being delivered and they want to know why.

The situation may even lead some of these vendors once again down that blind alley named ‘Direct Sales’ as a result of panic and fear rather than logic.

This is one of the reasons, to go back to the beginning of this argument, why MTV Telecom is absolutely focused and embracing new technology, a revolutionary software based IP PBX rather than a ‘me too’ evolutionary product. I believe we are the first mainstream value add distributor to do so.”

 
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