Largely Foolish

But underneath this general thrust into the midmarket lies a hidden agenda. Most of these vendors are hoping the incentives they are giving solution providers in the midmarket will ultimately entice solution providers in large Global 2000 accounts to abandon those customers to seek the higher margins associated with selling products in the midmarket space.

Those vendors reason they can handle Global 2000-class companies more efficiently themselves and secretly think their channel partners are the reason many Global 2000 companies continue to buy enterprise-class software and hardware from different vendors, rather than opting to buy, for example, all their software from IBM and all their hardware from HP.

Now, while incentives in the midmarket benefit everybody, they are not going to convince resellers in large accounts to give up lucrative service contracts in the Global 2000 in return for a few extra points of product margin in the midmarket.

Of course, large vendors know this and are dedicating increasing numbers of salespeople to enterprise accounts, all of whom are trying to take the business direct. The reseller naturally responds by increasing its own sales efforts and may even go so far as to try to convince the customer to switch to another, less troublesome vendor. This only infuriates the vendor even more, inspiring it to kick up its direct-sales efforts.

The result is that the customer winds up annoyed and confused. And just about everybody winds up with a higher cost of sales--with virtually no gain in market share to show for it.

As unnatural as this may seem in the fiercely competitive world of the Global 2000, the time may have come for vendors to initiate a period of dtente with solution providers in large accounts. The money being wasted on infighting in those accounts could be put to much better use expanding the opportunities for all in the technology-hungry midmarket.

Do you encounter infighting? I can be reached at (516) 562-7477 or via e-mail at [email protected].