10 Trends To Watch In 2008

Does anybody here know how to play this game? HP CEO Mark Hurd sure does. While rivals like Dell and Lenovo are floundering, HP has been hard at work, fine tuning its product, channel strategy and cost structure in each and every market segment. HP has its channel partners, direct sales force and even computer retailers marching to the same drum. All this makes Hurd's proclamation that HP plans to invest more in the channel in 2008 bad news for the many and varied HP competitors.

Look for HP to up the ante further with more HP badged sales professionals chartered with helping partners. These guys get it. The other guys don't. Hurd has already made HP the No. 1 IT company in the world at $104.3 billion. Fiscal 2009 sales forecast is as high as $118 billion. Size matters. An HP Market Share Tsunami is on the horizon.

There is a reason CompUSA closed up shop. Retail can't do computer services. At least not profitably or professionally. Retailers simply aren't willing to invest in the people and processes to do it right. The CompUSA closing is the first shoe to drop in the retailer computer services wipeout of 2008.

Retailers like Best Buy with Geek Squad, Circuit City with FireDog, and even Staples, offering computer services have run aground. Consumers, small office/home office (SOHO) and even businesses are finally hip to the computer retail services boondoggle and are turning to solution providers (Check out the complaint sites on the web). It's no mistake that after David Hemler, president of Best Buy For Business, saw the flaws in Geek Squad, the company inked a deal with the robust Ingram Micro Service Network (IMSN) as a national services bench.

No, the managed services marketplace is not cooling. No matter what those services luddites that remain solely focused on product tell you. Most businesses prefer buying all their technology products and services at a fixed cost from one technology provider. And nobody can do it better than a local provider that is on the ground making sure the business is getting the best technology bang for the budget.

Remember, managed services providers are the owners of the IT budget, forever bringing cost savings or revenue gains with each and every action. There is a reason vendors are slobbering for a piece of the managed services pie. Why do you think Michael Dell ponied up big bucks to buy Everdream and Silverback? Thar's Gold in Them Thar Hills. But only for solution providers that have the local touch, respect and credibility. Do you really want Dell to be the one throat you choke to keep your company up and running?

2006 and 2007 were banner channel merger and acquisition years, and 2008 looks to be as well. Look out, here comes the next M&A wave fueled by tightening credit, corporate cutbacks and belt tightening, presidential election angst, etc. It's happening in each every sector from e-tailers to one-time prosperous direct marketers to Microsoft large account resellers and solution providers that have failed to stake out a No. 1 or No. 2 position. That No. 1 or No. 2 could be a geographical, vertical (medical, insurance, financial) or technology specialization. If you aren't there yet, you better do some soul searching and shape up or ship out.

It's a condition that appears to be getting worse in 2008. Most companies continue to be shortsighted in their channel thinking and planning, shooting to attract an ever smaller number of solution providers. This in what is the most fast moving, game changing technology market ever (software as a service, VoIP, wireless, etc.) with the old guard being thrown out at an alarming rate.

Sure, overdistribution is not a sound strategy either. But do you really think you can grow sales and share with a shrinking partner base? And don't you think you should be constantly on the prowl for the right partners as you expand into new product and market categories?

This one's for vendors: Get rid of the coke bottle glasses and get with the program. Channel program, that is. Start looking at bringing more partners to the dinner table rather than fewer partners.

Speaking of channel consolidation, there are still far too many technology vendors and solution providers chasing that single big enterprise game deal rather than small and midsized business. The fact is enterprise IT spending is a Model T in a rut on the side of the road. Small and midsized business IT spending is a fast moving red Ferrari. You choose: Model T or Ferrari?

It's happening at an ever brisk pace, spurred on by everything from low quality overseas outsourcing performance and higher quality in-shore solutions to wage increases overseas and the declining U.S. dollar. All those businesses that thought they were getting a great deal offloading everything from technology help desks to application development got more than they bargained for in the form of bungled jobs. Listen for more solution providers to be talking about wrestling jobs away that were at one time outsourced overseas.

You read it here first. Remember all those big private equity deals this year like Madison Dearborn Partners paying a whopping $7.3 billion for solution provider behemoth CDW (That's an unheard of one dollar for every dollar of sales) or Silver Lake and TPG Capital paying $8.2 billion for Avaya?

Well, the big money private equity boys and girls are about to find out it's easier to write a check than to turn higher profits and sales. Part of this is plain old human nature. Many of the executives at these hot properties are riding off into the sunset with their cash even as the private equity companies enter the picture to clean up the mess. Good luck, kids.

Never has there been so much software available for free or a mere pittance. Some of it is courtesy of the absolutely amazing open source development phenomenon and another Freeware wave is coming from SaaS (software as a service) players looking to hook you and then get paid either from upgrades or online ads.

From the swarm of Office productivity suites available like OpenOffice.org to free online backup from sites like Mozy and Xdrive, it's almost mind boggling what you can get for free these days. There's a whole new wave of Freeware-hip VARs making big money helping their clients figure out who they can trust and can't trust in this Web 2.0 universe.

Given that the search engine giant with the $210.65 billion valuation has what it likes to remind us are the smartest people on the planet working on everything from the eagerly awaited Google Android-based phones to a killer cloud computing environment, we're betting this is the year that Google launches a full-fledged channel program.

Anyway, given that Google's plan is to officially be the last company standing providing every single conceivable web-based solution and services, imagine how much quicker they could get there riding the channel rocket, empowering tens of thousands of partners to take those Google services and customize them for every business on the planet? Today, the world. Tomorrow, the Milky Way.