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M&A Fuels Exclusivity Frenzy
Hewlett-Packard buys 3Com with an eye toward taking a bigger bite out of the networking market. Cisco Systems gets into the blade server game with an intent to grab share from HP. Oracle buys Sun Microsystems and promises an end-to-end hardware-software solutions stack.
Much of the recent acquisition activity among IT superpowers has been aimed at providing one-stop solutions, with a larger base of loyal VARs selling those solutions across the board.
Vendors, of course, have always wanted their solution provider partners to refuse to represent or invest in competitive offerings. But the consolidation and economic turmoil reshaping the competitive IT landscape today has made it a more pressing issue for vendors and solution providers.
Many partners insist that taking the 100 percent vendor exclusivity path is a Faustian pact that will ultimately lead to financial ruin.
“I think any VAR/consulting firm/systems integrator that is worth a darn would be silly to get into any exclusive relationship with any vendor,” said Rand Morimoto, president of Convergent Computing, an Oakland, Calif.-based solution provider. “In the 25 years I’ve had this company, every vendor has come and gone, most out of business or absorbed into another organization or brand, such as 3Com, Banyan, Compaq and others just changing focus.”
What was “in” a decade ago is never “in” 10 years later, and if business owners bank on a changing marketplace, it just sets them up to be exclusive with a vendor that is now out of favor, not the thing customers want, Morimoto added. “Vendor exclusivity is what brings down a good percentage of small and medium consulting firms/VARs as the vendor brings the consulting firm down with them,” he said.
With that in mind, CRN provides an in-depth analysis of the exclusivity pressure solution providers feel in various technology segments.
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