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A self-described "operational guy," Service Leadership's Dippell told onlookers that for most channel partners, the best strategy will be focused on white label resale.
"I don't think 'resale' is a bad word," he said. "But they need to build their own white label brand, because if the customer learns the name of the service provider behind the scenes, then the margins become a race to the bottom. They will immediately find another channel partner working with the same provider in order to leverage a better deal. And no one has ever figured out how to maintain high margins on identical stuff being sold by someone else."
Dippell acknowledged that cloud services are often a low percentage of overall revenue for most channel partners, but he was quick to add that the growth rates tend to be pretty impressive.
He also told the gathering that private cloud offerings are only viable options for very few partners.
"In order to compete in the private cloud, you need three skills," he said. "You need to have strong technologists who are totally in love with the blinking lights. You also need exceptional financial management skills with people who are experts in raising capital and managing cash flow. Finally, you have to ramp sales quickly enough to support a technology refresh in three years. By that time, equipment will start throwing more errors while advances in technology will start giving your competitors greater advantages of efficiency.
"If you can do all those things in a first-class manner, then stand-up your own data center," he concluded. "If not, then white label somebody else's offerings. Be loyal to your vendors, but don't talk about their brands. It won't add to your margins. It can only erode them."