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The economic downturn caught many a solution provider off guard, but Carousel Industries didn't flinch.
The Exeter, R.I.-based VAR grew by 12.5 percent from 2008 to 2009, then 34 percent in the following year, and is tearing through 2011 on a growth streak matched by few VARs its size.
With the industry consolidating and the cloud era dawning, VARs far and wide are challenged to make themselves more relevant and trustworthy to customers than ever before. To Carousel's top executives, that's not an optional transition.
"We need to get wider and deeper with clients," said James Marsh, Carousel's senior vice president, in an interview with CRN. "All of our Fortune 500 clients have told us one thing. They say, 'We're doing business with 300 vendors, and we need to knock out 50 percent. Here is a punch list of the vendors we're going with, and we need to bring this business to you guys.'"
Carousel, ranked No. 89 on this year's VAR500 list with revenue of $225 million, grew up as a telephony and infrastructure solution provider. But in recent years, it's expanded further into virtualization, data networking, security, video, wireless and the broader UC market. The company ended its 2010 having grown overall revenue 34 percent year-over-year. Its traditional voice business is up 20 percent, and all of its other major business lines -- from managed services to video -- are up between 100 and 1,000 percent, Marsh said.
The growth has been partially organic but also driven through an aggressive M&A strategy. Carousel has been one of the most acquisitive nationally-ranked solution providers out there, having bought outright, or acquired assets from, eight fellow VARs in the past two years, including video specialist OmniPresence, and Juma Technology, a fellow East Coast Avaya power.
In a recent interview at a Carousel customer appreciation event held at the New England Aquarium in Boston, Marsh said Carousel has been growing so healthily because it's poured resources into fast-growth segments, from video and virtualization to mobility, managed services, and, in a once-unlikely market segment now favored by more than a few solution providers, carrier and telecom services.
Marsh described Carousel's emphasis on placing bets where market shifts are occurring. Carousel's videoconferencing business, for example, is up more than 300 percent, in part because more businesses are finally adopting video. But that adoption isn't coming in expensive endpoints and dedicated videoconferencing rooms so much as it reflects how video is now part of an overall UC conversation, he argued.
It's a shift reminiscent of what happened in the voice market more than a decade ago, Marsh said.
"Going back 15 years, on the voice side we were so TDM-focused, and then the people that got out of TDM and got into hybrid IP and then full IP are now the guys doing well," he said. "We see this happening in video where a lot of the traditional A/V-type guys that have been in this business for a long time can't seem to move to that full UC conversation."
Solution providers also have to be looking at video managed services as a potential sale for customers who don't want to buy video endpoints or on-premise infrastructure, he said. Carousel as a whole is looking at more ways to offer hosted solutions to customer, in video and elsewhere -- particularly midmarket customers.
At present, Carousel only has a few hosted infrastructure pilots with customers. But in the next two years, Marsh said, hosted solutions could be 20 percent of Carousel's business. The reason for that is simple: more customers want to consume their IT from afar, with the infrastructure off-premise.
"The hosted piece is a place where we've got to hit a home run," Marsh said. "You find a company of 300 people, where the IT has gotten too complicated today. Why not go in and say, 'Let me take all of this off your plate'? The conversation, in my opinion -- why we're making this bet -- is that the midmarket space should be completely hosted, from data to security to voice."