Page 1 of 3
It's not even close. Solution providers say the Emerging Tech Dynamos are blowing away the big boys on all those fronts and more. And they are doing it in greater numbers. This year's class is made up of 163 players, up from only 75 last year. And the percentage of solution providers adding emerging vendors is on the rise, with 72 percent of solution providers polled by CRN adding an emerging vendor this year, up from 57 percent last year. To top it off, solution providers see these Emerging Tech Dynamos delivering a greater share of their profits as they look out over the next five years.
The popularity of emerging vendors highlights a growing trend in the SMB market: It is the solution provider's brand that carries the most weight. The emerging vendors recognize that power and are battling hard to win solution providers' hearts, minds—and selling power.
Emerging Vendors Are The True Innovators
Tim Hebert, CEO of Atrion Networking, a unified communications solution provider based in Warwick, R.I., said he expects the percentage of his net income coming from emerging vendors to grow to as high as 40 percent in 2012, up from about 25 percent today. That's because Atrion is pushing the unified communications envelope to deliver products and services in the innovation and early adopter stages.
"We push that edge," said Hebert. "Emerging companies love us because we take the time to develop that market because we know that is where the product margin and service revenue is at an all-time high."
Herbert said emerging vendors are becoming more important because of their ability to be on the cutting edge. "The big companies have a lot of money and are pulled in a lot of directions. It is very hard for the big companies to be true innovators," he said.
One of Atrion's brightest emerging vendor stars is Bradford Networks, which beat Cisco Systems to the punch in the network access control (NAC) market. Hebert said he makes double the net profit on the Bradford product (22 percent to 24 percent) vs. Cisco's Clean Access offering (12 percent). He said Bradford, Concord, N.H., owns 90 percent of his NAC business because of its outstanding technology, superior technical support and tight field engagement with his team.
Herbert began partnering with Bradford in 2001, well before Cisco entered the NAC market by buying Perfigo in October 2004.
Bradford still has an 18-month lead over Cisco, according to Hebert. The Bradford solution is more scalable and has a deeper feature set, he said. "That is where Bradford shines hands down. Bradford has been very good at coming out with new releases, moving the product forward."
The emerging vendors' products are aiming to get as close to 100 percent of what a client needs in a best-of-breed product, whereas the bigger vendors often are shooting for an 80 percent mark, said Hebert. "The emerging vendors have their fingers on the pulse of what the clients really, really want. It is not only just a good engineering idea. They understand what the client wants and they are very good at building that into the product."