8x8 Promises Big VAR Returns In New Cloud Networking Channel Program

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As the VAR and telecom agent channels converge and IT solution providers look to cloud-based services to fortify their margins and customer bases, the ideal service provider channel program for VARs is going to be the one that eliminates channel conflict from the get-go and promises VARs revenue streams that they can be comfortable with, at margins they can live on.

8x8, the longtime VoIP provider and, more recently, hosted networking specialist, thinks it has that program.

Next week, 8x8 will formally debut an authorized reseller program designed by IT channel veterans to appeal to VARs that are skeptical of service provider compensation schemes, but who are embracing hosted and cloud-delivered services to buoy their traditional reseller businesses going forward.

"We're repositioning 8x8," said Kim Niederman, senior vice president of worldwide sales operations for 8x8, in an exclusive interview with CRN. "What sets us aside from a lot of the cloud SaaS and IaaS service providers is that we want to go through the mainstream data VARs as opposed to the interconnects."

Sunnyvale, Calif.-based 8x8, which has been publicly traded since 1997 and is one of the country's largest VoIP service providers, claims about 25,000 businesses in its customer base and is increasing that base by about 1,000 businesses a month, Niederman said. It has six data center locations in the U.S., and focuses on SMB customers with an appetite for cloud-based networking services.

8x8's roots are in producing chips and software for the videoconferencing market as well as chips for VoIP manufacturers, and it began selling end-to-end VoIP services in 1999 following several acquisitions. In 2010, 8x8 shifted its focus to providing cloud-based hosting services following its acquisition of Central Host.

It's in the cloud-based networking services arena where 8x8 sees a monster channel opportunity in front of it, Niederman explained -- particularly for VARs who want to offer cloud-based VoIP to replace traditional on-premise phone systems, cloud-based contact center, cloud-based managed hosting in an infrastructure-as-a-service (IaaS) format and cloud-based video services.

"If we can offer that by one provider as a solution rather than four providers, that'll have a big impact for the end user," Niederman said.

8x8's flagship VoIP service is 8x8 Virtual Office, which is a SaaS-based hosted PBX offering unlimited calling and various enterprise business phone features delivered over public or private broadband networks.

8x8 offers several flavors of Virtual Office, including Virtual Office Solo -- a single-line business service and softphone designed for small office/home office (SOHO) users -- and Virtual Office Pro, which bundles 8x8's Virtual Meeting video web conferencing, Internet fax and other unified communications features for use with IP phones, softphones and mobile phones. The Pro solution is priced at about $50 a month per line.

Video services are newer to 8x8, which in April launched Virtual Room, an SMB-centric, cloud-based video service that can be launched from 8x8 Virtual Meeting and uses 8x8's SIP-based technology. The service is powered by Polycom's UC Intelligent Core platform and 8x8 has established a $200-a-month flat rate per system use.

The other two elements of 8x8's four-pronged cloud networking services approach are managed hosting and cloud-based contact center services. The company plans to use the provisioning, virtual private service, managed DNS and various monitoring tools 8x8 bought with its recent acquisition of Zerigo as part of the managed hosting offering.

Support for 8x8 services -- including software upgrades and bug fixes -- is included in the flat rate pricing, according to the company, at no extra charge.

Structurally, 8x8 will continue to put resources behind its inside sales teams and also direct market resellers, but the bulk of its new channel recruitment efforts will focus on enterprise VARs and systems integrators, SMB-focused VARs that work with distributors, and master agents and their sub-agent communities.

It's in the design of its new channel program where 8x8 is relying on the specific expertise of Niedermann and Vice President of Channel Sales Don Trimble, who like Niederman, joined 8x8 in February. Both executives have deep expertise in networking sales and lengthy IT channel backgrounds, with channel-facing executive stints at Cisco, NComputing, 3Com, HP ProCurve, Polycom and a number of other companies between them.

Trimble has no doubt 8x8 has what it takes to draw in data networking VARs, and it starts with the compensation model 8x8 has created.

"The whole mentality of a VAR is getting something at the time of sale," Trimble said. "I wanted to make sure we baked that in, because I think that's how we're going to hook them, and get them to understand how to shift to a residual-based model going forward."

Next: The Nuts And Bolts Of 8x8's Channel Program

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