Mortgaging The Future

Some of the biggest and most powerful vendors in the technology business are about to be walloped by a subprime channel crisis.

Subprime mortgage players put their companies into the toilet with loans that never should have been made. Subprime channel players put their companies into the toilet with channel programs focused on an ever-smaller number of partners year after year.

Foolhardy economics is the common denominator here. Both groups of players sacrificed long-term health in favor of short-term gains. Subprime mortgage players were only interested in collecting their big fat commissions and to hell with those bad loans coming due. Subprime channel players were only interested in making their quarterly channel nuts and to hell with building a healthy channel.

STEVEN BURKE Can be reached at (781) 839-1221 or via e-mail at sburke@cmp.com.

Those that have any doubts about just how serious the subprime channel crisis is would be wise to get a hold of some exclusive research from CMP Channel's Institute For Partner Education & Development, which set out to define the high-growth channel of the future. The simple fact is many of the big vendors have paid little attention to the mix of solution providers in their stables. This trend comes as solution providers are becoming more vendor-agnostic and adding more vendors than ever before to their product portfolios. What's ironic is that the subprime mortgage crisis now shaking up world markets is also going to have a big impact on the channel. There has already been dramatic consolidation going on in the channel, particularly in the IBM and Sun arenas. The tightening credit crunch is going to make it worse.

For those that want to get a feel for what could happen to these big vendors, take a look at the subprime meltdown taking place at the nation's largest mortgage company, Countrywide Financial. Needless to say, Countrywide Financial will contend with its subprime shortcomings for some time. And so will the big technology players that have foolishly bet the farm on an ever-shrinking number of partners.

Which vendors have subprime channels?
E-mail me at sburke@cmp.com or call me at (781) 839-1221.

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