When Was the Last Time Technology Wowed You?

Is innovation dead, or is it just taking an extended vacation? That's the question you should ponder as you read through our annual State of Technology (SOT) issue, dedicated to exploring the key technologies VARs used to deploy solutions in 2002 and the ones they're focusing on for 2003. Where we're headed is the more important of the two, but, either way, our research,which yielded some eye-opening findings about how VARs are refining their business models,raises the specter that solution providers face a dearth of innovative new products compared with their choices in the past.

Surely, giants like IBM, Intel, Microsoft and Cisco are spending billions on R&D. But the pace of product introduction and technical advancement seems to have slowed. When was the last time in the past year you were truly wowed by a computing device? Sun's biggest product introduction this year was a Linux-based server and desktop system, IBM enhanced its existing middleware products, and Microsoft's big push was reserved for MSN 8.0. I've been more excited about recent advancements in golf-club technology than I have in IT products.

In the past several months, most vendors have spent the bulk of their efforts talking about their services strategy or channel program enhancements, rather than a breakthrough in

server technology or networking. It has been a long time since a product introduction like the Macintosh or Windows 95 mesmerized the masses. It seems like eons ago that a packaged solution built around PC desktop-publishing software and a laser printer opened up vast new opportunities. Although plenty of promise surrounds wireless networking, there isn't a single company or consortium driving it forward as Apple, Aldus and HP drove the desktop-publishing movement.

Microsoft's .Net was probably the hottest new technology to hit the channel,but can anyone really explain what the heck it is? Yet, in a strange way, .Net actually embodies what this issue of VARBusiness is all about. Microsoft's Internet platform isn't really a single technology, but a string of software solutions that must be integrated to deliver a final product to the customer. In essence, it's a solution wrapped in the software and consulting services that VARs present to their customers.

Still, it seems as if someone in the industry has hit the pause button. In fact, the biggest lift the industry received most recently was Microsoft's rush to upgrade its customers to a new Enterprise Agreement contract for software upgrades, maintenance and licenses. The contracts are a way for vendors to charge customers more as they sneak in price hikes of 3 to 5 percent. One contract negotiator inside a large firm says he was forced to start writing price-hike caps into his vendor contracts to prevent such practices. It's not that his firm was reluctant to spend on technology. On the contrary, it would pay for innovation if there were something new to inspire it.

How can our SOT issue help you build new customer relationships? The study suggests that VARs are migrating to new solution areas, such as application integration and middleware, as they flee the paltry margin territories associated with selling hardware. This is reminiscent of a trend a few years back when solution providers started to diversify into services and consulting. VARs are good at reading the tea leaves, and correctly envisioned a time when vendors would be selling a higher percentage of their hardware directly to customers. Now, they see their vendor partners moving more deeply into services, so they are once again diversifying,this time delving more deeply into the software-development space.

Still, VARs need some help from their vendor partners in the form of training and certification; that's the No. 1 offering they desire most,ahead of such items as leads, new customers and even financing. Their appetite to master XML, J2EE, data-management software or Web apps seems insatiable today. Based on the solution providers we surveyed, Microsoft, as you would expect, is the most popular vendor. What might surprise some is that IBM is second with a strong lead over Sun, Oracle and the open-systems vendors.

This year's SOT survey differs from last year's and has been enhanced with more quantitative research we gathered from a survey of more than 300 solution providers. Longtime VARBusiness readers will find some similarities between this issue and our upcoming Dec. 16 State of the Market issue. Our readers demanded more information on technology trends, which formerly comprised only a portion of our State of the Market study. By breaking out technology, we were able to add deeper analysis of the evolving solution-provider business model. Let me know what you think at rdemarzo@cmp.com.