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We'll begin with some of the macro trends revealed by the survey--the motivations VARs have and challenges they face in working with alternative vendors.
Across the board, pricing opportunity plays a big role in solution providers' consideration of an alternative vendor. Market leaders tend to be more rigid in their pricing, setting standards and requirements for how much solution providers can resell their products. Solution providers also said alternatives provide better margin opportunities.
On the other hand, solution providers generally ranked service opportunities among their lowest considerations. This comes as a surprise, given the relatively higher margins they earn on services sold in conjunction with hardware and software packages. This disparity could reflect that some solution providers are still trying to squeeze margins out of traditional hardware and software products.
Other considerations for adopting an alternative--and there's no surprise here--are gaining access to innovative technologies and beefing up product portfolios. Some market leaders have built their success on being the best in a key technology or with a specific product, but fail to innovate to cover all the niches in their technology set. Alternative vendors often gain a foothold by filling the gaps left by larger counterparts.
Product performance and capabilities varied in importance in the 10 different technology categories surveyed. One possible explanation is that solution providers will seek a vendor that doesn't have all the capabilities and high performance of a market leader because their clients can't afford top-line technology or don't need all of its capability. Oftentimes, market leaders are disrupted by alternative brands because the alternative products exceed the market's needs in both capabilities and price. Alternatives give solution providers a choice in right-sizing their solutions.
Who searches for alternatives? By and large, it's executives (35 percent) and technical managers (33 percent), followed by sales and marketing personnel (22 percent).
Solution providers are seemingly always on the prowl for an alternative vendor that's going to bring value to their business. Nearly half of solution providers surveyed said they're looking for alternatives on a daily (9 percent), weekly (14 percent) or monthly (20 percent) basis. A nearly equal number said they'll seek an alternative on an "as needed" basis. While "as needed" may sound ambiguous, it shows that solution providers will gravitate toward an alternative when opportunities present themselves.
NEXT: Survey methodology.
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