What Is AT&T Thinking With Its Dramatic Shift In Channels?

As CRN Section Editor Matt Villano reports on page 5, the company earlier this month terminated hundreds of its channel partners via a letter and has restructured its channel program, apparently without any forewarning.

I firmly believe that a company's channel and the programs that drive it are always a work in progress. So change, even drastic change, isn't taboo. But when modifications are afoot, they should be clearly communicated. The reason for those changes needs to be explained, or any future attempt to woo the channel back will be twice as difficult. The fact is, the relationship between a vendor and its channel is something that should be treated delicately. Once a vendor breaks the trust with its channel, that damage is not easily repaired and often is the catalyst for a rapid decline in the vendor's business.

Now, to be clear, AT&T isn't exactly in the best shape of its storied life. There was a time when it was arguably the most powerful company in the world. But that was many moons ago, and we will never see it regain its former swagger in the market. That's what makes this development all the more troubling. I've seen other companies make similar moves when they were in very powerful positions; even then, they have never recuperated.

Two examples bear remembering--because those who do not learn from history are destined to repeat it.

Apple Computer at one point literally owned the education market, specifically the K-12 space. It captured that space through a large network of solution providers, and I knew hundreds of them. They were smaller players that won particular markets through relationships in those communities.

By living and working in small-town America, these Apple resellers, many of whom sold nothing but Apple, were the reason the company captured the education market. But one day, Apple eliminated all but a handful of those solution providers. The deauthorized players immediately began selling Windows-based products to school systems, and Apple ceded the market.

Toshiba made a similar blunder years ago when it was the hottest laptop manufacturer on the planet. It got cocky and ratcheted back on its distributors, quickly losing its market-share leadership as a result. It tried to kiss and make up a year or two later, but the channel had moved on.

In my opinion, AT&T is making a similar mistake by axing more than 500 of the 800 or so agent partners who resell its services. What's more, it is significantly restructuring the program. And what is really troubling is that AT&T apparently didn't give a heads-up to those who were terminated nor has it stepped out proactively and explained its new strategy to those who remain.

Celine Azizkhan, AT&T's vice president of indirect sales channels, needs to get out there quickly and explain exactly what is going on and what the longer-term direction of the company is going to be when it comes to partners. If she doesn't, this move will be perceived as a dramatic shift away from indirect channels. Not only will those who have been terminated begin selling competitors' products, but those who remain in the program may do so as well.

Maybe we should have seen this coming. After all, the VARBusiness Annual Report Card issue published last week shows a dramatic decline in AT&T's scores.

Over the long term, the pain a vendor experiences in the channel is equal to the pain it creates.

Make something happen. I can be reached at (516) 562-7812 or via e-mail at [email protected].