Emerging Profits

That's because a whole wave of emerging vendors is actively courting solution providers with tools for disaster recovery, document management and security—to name just a few. These smaller vendors are hungry for relationships with solution providers and are seeking them out and striking deals with them directly, often bypassing distributors and the two-tier route to market.

Solution providers say these emerging vendors aren't overdistributed. Moreover, they're often able to negotiate exclusive rights to the products in their markets, and customers can't jump on the Web and comparison shop. "My margins are out of this world," one VAR said. "We are getting 40 points of margin and huge attach rates on service."

But ask solution providers to name names, and they get a bit secretive about their best and most profitable new vendors. "You know, I don't think I'm going to tell you," one VAR said last week. "That would be like telling you my favorite fishing spots."

Another said one trick he uses for finding hot new vendors is to get on competitors' Web sites and look at their vendor partner lists. If a vendor pops up that he hasn't heard of, he'll check it out.

But secrets don't last long in this business. Many astute emerging vendors are eager to get the word out. Unlike the Dells or the Apples of the industry, they understand the channel is the most economical and profitable route to market. Satish Dharmaraj, CEO of Zimbra, an open-source e-mail collaboration and document management tool vendor in San Mateo, Calif., told me that 50 percent of his business goes through solution providers. He hopes to increase that to 80 percent to 90 percent within a year by recruiting small, regional solution providers.

CRN is committed to removing the veil between emerging vendors seeking to grow their channel business and solution providers hungry for profitable tools to augment their practices by building an emerging vendors database. Stay tuned. The underground economy is about to go mainstream.

Are you willing to divulge your tips and tricks for finding new opportunities? Contact me via e-mail at [email protected].