Category: Opinions

Can HP clean up its channel conflict act?

clean_up_after_yourselfThe maker of expensive printer ink HP has fast discovered the problems of hacking off the Channel.

For a number of years now, HP has had a problem in that its direct-selling sales teams have been nicking deals from their channel partners. While this has been good for the company in the short term, it has led some resellers to wonder why they should line up deals, when HP would just nick them from underneath them.

We reported on HP’s channel conference here, and here.

Unsure if it was going to keep its hardware business, HP did not seem that keen to tackle the problem. After all if Leo Apotheker’s plan paid off, then there was little reason to care about hardware partners, as they were going to be dealing with a new business, who would presumably be kinder.

As a result hardware sales dropped, in part because of the lack of morale of HP’s hardware partners. More than 70 percent of HP’s sales are delivered through its channel.

All that changed when the new CEO and president Meg Whitman decided to keep HP’s hardware business. She realised that without a fully functioning channel, the whole business was rubbish.
She ordered the company to develop better rules of engagement for HP’s direct sales team which did not step on the toes of the channel.

Speaking to the recent Global Partner Conference, Whitman said that partners had “literally built” HP’s business over the years, and she warned that any move which took business away from the HP channel and going direct would not be tolerated.

“Everyone in the HP organisation is crystal clear on the behaviour we expect. I am holding myself and the executives accountable for that,” she added.

But that did not mean that HP was going to close down its direct sales operations. Indeed the rules that Whiteman has been pushing forward might be hard to implement.

Her view was there are accounts that HP will take direct, but there must be “no mystery” in the process, and that partners who have done months of work on a deal will be paid even if transacted by HP.

The agreement basically makes a few pledges. Partners are not restricted from selling to anyone but the bigger accounts still have to involve an HP field rep.

HP has promised to leave the midmarket to the channel which which is a significant change.
The company’s opportunity registration policies are being used to govern behaviour. If HP accepts a partner’s registration, the company will not sell direct on that opportunity.

HP has set up a “value express pricing” programme, where HP channel partners will be rewarded for the value they provide.

It also has promised for there to be mandatory training on the new rules.

While this sounds good, it is hardly tangible. Under what circumstances would HP take a customer away from its channel partner? How much work would have to be done before a partner got paid?
In fact it might also be difficult for HP to fire sales staff that do pinch deals from partners. While they may be breaking HP’s policies, they are not breaking any laws. Sales teams are not famous being open to what they perceive as rivals when they are looking for commissions.

The only way a channel deal can be protected is if they are go for certifications and will use registration. This makes the deal more open, but it also makes it vulnerable to gazumping by HP’s internal teams.

As Jack Mele, vice president of sales at Data Impressions pointed out, it will only work if the Whiteman’s corporate edict trickles down the way it should.

However it is better than nothing, according to Search IT Channelmany in HP’s channel welcomed the change. Craig Sehi, of Sehi Computer Products said that HP’s new “rules of engagement,” were a welcome relief and was sign that HP is listening to its resellers.

But it is clear that HP has a long way to go before it can calm its jittery channel and get them working together.

Heavyweights hug mobile payments, but more work ahead

google-walletA series of optimistic reports and forecasts on e-commerce seems to indicate that mobile payments are becoming increasingly commonplace and that we could soon ditch our trusty leather wallets in favour of smartphones. Sadly though, we won’t, at least not anytime soon.

The trend is positive and we are seeing a lot of growth, especially in m-commerce. In addition, a number of big players have made significant announcements in recent months. Last week Visa expanded its Visa Ready Partner Programme in an effort to get more vendors, developers and retailers on board. Samsung followed up with a service of its own, the Samsung Wallet, which bears more than a passing resemblance to Apple’s Passbook app. Samsung already managed to attract several partners for its new service, including Visa.

Then there is MasterCard’s MasterPass service, which allows retailers come up with their own applications and services, based on MasterCard’s infrastructure. PayPal is no newcomer to the market, but its PayPal Here service is. Launched in the US last year, it finally found its way across the pond to European shores. It offers a comprehensive solution, with a hardware dongle and cross-platform app support, and it allows users to pay using credit cards, cash, PayPall wallet or checks.

What about the elephant in the room? Well, there’s actually two elephants. Google Wallet has been around for quite a while, but it failed to take off. It was supposed to demonstrate NFC capabilities on Nexus gear, dating back to the Nexus S, which it did. However, much like NFC, Google Wallet never made much of a name for itself.

It might have something to do with the second elephant, Apple, as it never embraced NFC technology and it is still unclear whether the next iPhone will feature it. Apple has not made much noise on the mobile payment front, which doesn’t mean it is not looking into it. To the contrary, Apple has already filed several patents for NFC enabled devices and services. Cupertino doesn’t like spilling the beans on upcoming products and services, and unlike some companies, it tends to have excellent execution. It is also worth noting that Apple bought AuthenTec, a maker of fingerprint sensors and security solutions, for $356 million last year.

With all that in mind, nobody should be surprised by soaring m-commerce and mobile payments statistics. In fact, we should be seeing even more services, from brick and mortar shops to pubs, but we aren’t. Mobile payments and are still geeky turf, with little traction among mainstream consumers. The sheer lack of widespread support for m-commerce platforms and the fast pace of development means that many consumers don’t even know it exists. What’s more, many of those that do still have some reservations.

Privacy and security are valid concerns, but a recent survey by Intela revealed that the majority of smartphone users in the UK now feel comfortable with mobile payments. It is hardly surprising, as most smartphone users have grown accustomed to making micro transactions in app stores or through in-app payments. The difference between spending a few pence on an app and a few pounds in a retail shop is philosophical and not technical in nature. In fact, it appears that humble micro transactions have already done more for m-commerce confidence than all the fancy services rolled out by credit card companies and tech outfits.

In spite of that, smartphones will not replace wallets, at least not entirely and certainly not anytime soon. Cash can’t be hacked, it can’t be rendered useless by a flat battery or a few drops of lager. In some cases it is just more practical. The same pretty much goes for credit cards. Smartphones have their own set of advantages. Motorway tolls, public transportation, congestion charges and parking based on GPS information are some that come to mind. Phones are an excellent payment platform, but they will complement cash and cards, not replace them.

Microsoft: resellers coming around to cloud

clouds3Traditional resellers have been slow in embracing the cloud, with many predicting the technology was “just a hype,” a Microsoft spokesperson has told ChannelEye.

However, according to Clare Barclay, director of SMB at the company, two years later resellers are embracing market changes.

“Traditional resellers are in a competitive market with younger companies evolving far quicker,” she told ChannelEye. “Two years ago they put Cloud down to just a hype and continued with their business as it was. However, they are now changing.”

Microsoft believes cloud has changed the way resellers and the market operates, eliminating the need for cumbersome software and hardware. Savvy SMBs have also set up their business using this technology to make them appear bigger and offer their customers more services.

“Most SMBs have now realised that they need to capitalise on cloud, and offer services that put them in a position with their competitors,” said Barclay.

She also pointed out that Office 365 was enabling the company’s partners to offer more services to their customers.

“Three to four years ago customers were worried about buying into a cloud based model but now this is aggressively growing we’re seeing a number of partner engaging in monthly based subscriptions,” she said.

Microsoft said it is trying to seduce resellers into cloud confidence by offering training and events programmes to outline the benefits.

20 shops close a day and it’s getting worse

highstreetRetail chains in Britain closed an average of 20 stores a day over the past year. According to a report by the Local Data Company and PwC, the number of shop closures in 2012 soared tenfold on the year before.

It makes for some depressing reading to say the least. The survey found that 1,779 stores were closed in 2012, compared to just 174 in 2011.

The downturn seems to be affecting every sector, from travel agents and sports goods shops, to banks, computer game shops and jewellers. However, some businesses seem to have bucked the trend, including charity shops, pawnbrokers, pound shops, betting shops and payday loan companies, basically all the services people are likely to use when they are broke like Greece and out of work like Spanish youths.

It gets worse. The number of closures is predicted to rise and the rate of closures in December, January and February is up and could hit 28 a day. Many companies are falling into administration, including former heavyweights like HMV. Blockbuster, Jessops and Comet are down and out as well.

Mike Jervis, insolvency partner and retail specialist at PwC believes the downward trend is getting even worse in 2013.

“2012 saw more retail chains go into insolvency than ever before. The failed chains generally shared two problems- too many stores and too little multi-channel activity,” he said. “A number of them had failed to deal with their underlying issues by hiding behind light touch restructuring processes, especially Company Voluntary Arrangements.”

Christine Cross, chief retail adviser to PwC, said the figures are more disappointing than many had hoped, but she pointed out that several major chains were forced to resort to closures and this was anticipated for a long time.

“What is surprising is the speed at which stores have been picked up by value and grocery retailers in particular. Good businesses with good operating models and good people don’t fail,” she said.

Although closures are up across the board, some regions have taken a bigger hit than others. The South East leads the way with 376 closures, 265 shops closed their doors in West Midlands and the North West saw 215 closures. The North East, Scotland, Yorkshire and the Humber stayed in double digits.

Google starts to recruit resellers against Amazon Cloud

cloud 2Google and Amazon have been scrapping it out for dominance of the skies, but now it seems that the search engine Zeppelin may be trying to recruit resellers to help out.

According to GigaomGoogle has signed up its first reseller, a company called RightScale, which is offering a “cloud management platform”.

It helps an enterprise automate routine tasks, monitor usage and monthly costs, and control security options.

As a reseller RightScale works with other major providers of Internet-delivered computing power and storage, including Amazon, RackSpace, HP Cloud, and Windows Azure. But its products have always worked with Compute Engine since Google launched the cloud service in June.

What this means is that Google has finally woken up and realised that its enterprise customers not only need someone to sell them the products, but also hold their hands if something goes tits up.
One of the difficulties that Google has had is that the company is so big, that getting information on its products, particularly when something goes wrong, is difficult.

But there are some elements of self-protection here. This partnership announcement comes a week after Amazon launched a new service called OpsWorks, which competes with RightScale. This means that by having resellers Google and the reseller can protect each other from the Amazon juggernaut.

In the long term Google will probably do better than Amazon. It has a lot more experience running Apps on the Cloud, and soon its products will be faster and cheaper but this announcement is a reminder that even super-companies like Google need resellers to get their products out there.
Google is also the new kid on the block and many corporate customers will not be aware that it is out there yet. Having a reseller pushing product is one way of raising the profile.

Posh hotels gouge guests for Wi-Fi

hotel-roomIt is no secret that free Wi-Fi is good for business, so it is available practically everywhere, from pubs and service stations, to public institutions.

However, it is still not available in most hotels and according to a survey carried out by travel site Gogobot, posh hotels are still charging an arm and a leg for a bit of Wi-Fi.

On the face of it, there is nothing wrong with charging a few pounds for unlimited Wi-Fi, but the survey also confirms another angle – the pricier the hotel, the pricier the Wi-Fi. It is cheeky, to say the least.

Gogobot’s survey of UK hotels revealed that some establishments, such as the Hilton, charge as much as £15 per day. Smaller boutique or independent hotels are cheaper and some offer free Wi-Fi, while others charge up to £5 and £8 per day. It doesn’t sound like too much, but the cost can quickly add up in a matter of days and it is obvious that frequent travellers (or their employers) could end up wasting hundreds of pounds on overpriced Wi-Fi over the course of a single year.

What’s more, the survey found that Wi-Fi access was at times spotty and unreliable, reports Mashable. Quality remains a problem, no matter how much you pay.

“There is no correlation between the amount you pay and the quality you get,” Kelly Lees, general manager in Europe said. She argued that tetherless travel is here to stay and the days of connecting to the internet using Ethernet in hotels are “long gone”.

However, things could be about to change. Lees says Wi-Fi prices are starting to affect hotel ratings. Travellers who believe they were ripped off on Wi-Fi will not give hotels a five-star rating. In addition, the availability of low cost 3G/4G services could make hotel Wi-Fi as obsolete as Ethernet, unless hotels finally realize that they stand to gain more by offering free Wi-Fi rather than making their guests pay through the nose for every byte consumed on business trips.

Intel Ultrabooks are the “Titanic of the 21st Century”

Der Untergang der TitanicResellers have lit into Intel Ultrabooks likening the range to the “the Titanic of the 21st Century,” and calling the products a “sinking expense.”

The comments come as resellers are still seeing bleak sales  for  these products, with some saying they can’t see a light at the end of the dismal tunnel.

Intel’s slim line babies had been touted as a lighter way to work, however, according to recent research by IDC, the company’s emphasis on its skinny form factor did it no favours as the price tag is still sky high.

However, it seems the stubbornness of the company, and its reluctance to cut prices, have angered resellers.

“Ultrabooks have really been the Titanic of the 21st Century. A disaster, and sinking expense,” one told ChannelEye today.

“It seems to me that whatever Intel does, and however much it throws at this brand, it’s just not going to take off unless it reduces prices for these ranges significantly.

“However what we’ve heard from the company hints that this isn’t going to happen, meaning we’ll once again be left with surplus stock and low margins as a result.”

Others agreed, claiming that the price point was the thorn in Intel’s side.

“Ultrabooks still aren’t doing as well as we would have liked. No one wants an overpriced laptop at the moment and the slim USP it’s got going on just isn’t attracting consumers,” another reseller told ChannelEye.

“There are cheaper, but bigger laptops that offer similar features that just make purchases more justified.”

Others have also pointed out that although the company could cash in on the upcoming holidays, consumers again would be reluctant to opt for this product with tablets offering a better price point.

“We’re hoping to see a rise in Ultrabook sales as the summer holidays come around, but it’s market. Some families who are going away will be looking for a light device that can keep kids occupied on a plane as well as act as a virtual mag/book.

“Although an Ultrabook would be perfect for this, the reality is the price points will push many to a tablet,” he added.

Taiwanese server makers take on traditional OEMs

server-racksThe server market has been dominated by the same players for years, but times are changing and Taiwanese outfits are aggressively entering the lucrative market.

Talking to EEtimes, Quanta cloud computing group general manager Mike Yang pointed out that Taiwanese companies are ramping up production of servers, switches and storage systems. The trend threatens to undermine the position of traditional OEMs.

“Traditional OEMs no longer have the advantage, we do,” said Yang. “The business model is changing and it provides us a very good opportunity.”

It could be said that Quanta entered the server market by accident. Five years ago it landed a sizeable contract from Facebook, which prompted the company to rethink its approach to the server market. Yang said the deal had a big impact on Quanta and it was quite surprising, as the company usually only provided precuts to OEMs.

But Facebook is not alone and Big Data is showing a lot of interest in Taiwan. Google and Microsoft also realised they could easily tap Taiwanese companies to build custom designed server suited for their needs. Two years after the Facebook deal, Korea Telecom also approached Quanta to build server racks.

“We asked them why they came to us, and they said they heard we were doing business with several of the biggest data centers in the world,” Yang said.

It did not take Quanta long to realise that it could cut out the middleman and sell its gear directly. Last year Quanta officially created its data centre group and it is pursuing the market more proactively. However, the company is playing both sides and it is still building servers for OEMs like  Dell and HP.

Quanta is not alone and one of its chief rivals is Wistron, a former arm of Acer that makes PCs for OEMs. Wistron is now getting orders for racks and last year it launched a spinoff called WiWynn to handle the data centre business and prevent possible conflicts of interest with OEM clients.

Say Tata to broke Indian outsourcers

Workers are pictured beneath clocks displaying time zones in various parts of the world at an outsourcing centre in BangaloreReports from India suggest that the country’s  IT outsourcing business is turning a corner after being in a slump for a while.

This means that the UK companies can expect to find tougher competition from Indian based software companies, outsources and contract service outfits in the near future.

Analysts predict an improvement in India’s outsourcing industry, which has been gutted for many quarters by shrinking IT budgets and a slowdown in decision making by customers in the traditional markets like US and Europe.

Research firm Offshore Insights predicts that the offshore market for outsourced services is will grow by 12 percent to 15 percent this year, as more customers are expected to increase IT spending.

India’s $100 billion IT services sector seems to be recovering thanks to the acceleration in IT spending by existing customers although there have been a few new sign ups.

This week, Nielsen Holding increased the size of its contract with India’s top software services exporter, Tata Consultancy Services Ltd, to $2.5 billion from $1 billion.

India’s $100 billion IT services sector has been in the doldrums for a while but it seems to be recovering thanks to the acceleration in IT spending by existing customers.

TCS has major clients including General Electric, British Airways and Sony and competes with rival Indian software providers Infosys and Wipro as well as multinational firms such as IBM and Accenture Plc for outsourcing deals.

The National Association of Software and Services Companies (Nasscom) also forecasts that India’s exports of software and services will be between $84 billion to $87 billion in the Indian fiscal year from April 2013 to March 2014.

One of the problems that some business watchers believe that the Indian outsourcers will have to tackle is the fact that they are dependent on a revenue model that is largely dependent on the number of people working on a project.

This worked well when IT labour was cheap. While labour is still comparatively cheap in India, it is getting more expensive meaning that outsourcers have to woo new business with promises based on owning some natty technology and replicable processes.

They will have to shift more of their operations closer to their key markets in the US and Europe.

E-fags cause regulatory stink

efagThe days when sparking up a fag with a drink in the warmth in public is a misty memory for those who live in the UK.

Instead smokers have had to endure the cold, snow, and often spaces smaller than a battery farm in a bid to get that nicotine hit after a meal at a UK restaurant, in a bar or in a club.

However, it seemed that some smokers’ problems were stubbed out thanks to the E-cigarette, which steam rolled into the market.

Marketed as a lower risk option to smoking and a way to help quit the habit, this new product
also had the added extra of allowing people to “smoke” inside.

The e-cigarette comes in two parts. One end contains the liquid nicotine, while the other has a rechargeable battery and an atomiser.

When the user inhales, the liquid nicotine is vaporised and absorbed through the mouth.

As there is no tobacco in these products, there is no harmful, and potentially lethal tar, and the “smoke” that these emit is mainly water vapour.

According to the charity Action on Smoking and Health (ASH) around 700,000 people in the UK were using e-cigarettes last year, with around 300,000 more predicted to use these this year.

However, new proposals could now see the industry, which has around 100 manufacturing companies, go up in, er,  smoke.

Earlier this year the British Medical Association (BMA) called for more regulation and research around these products, advising  health professionals to use regulated and licensed nicotine replacement therapy instead to help patients stop smoking.

It is also calling for restrictions to the marketing, sale and promotion of e-cigarettes, and for clear labelling on the contents of cartridges and their safe use.

In an updated online briefing, it pointed out that these battery-operated devices were not licensed as a medicine in the UK and there was a lack of peer-reviewed evidence on their value in helping smokers cut down or stop.

It also said there were concerns that the use of e-cigarettes could threaten the norm of not smoking in public places and workplaces.

BMA director of professional activities Vivienne Nathanson said: ‘It took us many decades and hundreds of thousands of deaths to understand the connection between cigarette smoking and disease. We must not encourage use of a new system of nicotine delivery when we are unsure about its safety, or efficacy as a means of stopping smoking.

‘We are especially concerned that e-cigarettes might reinforce the smoking habit as they are designed to closely mimic smoking actions.’

The UK Medicines and Healthcare products Regulatory Agency is set to report on nicotine product regulation this spring.

Dell hints at more buys in open letter

mikedellcloseupFollowing Dell’s acquisition of, er, Dell – taking the behemoth off the public market – CEO Michael Dell has penned an open letter to the company’s customers which promises “organic” and “inorganic” investment. Translation: Dell’s patent-packed Supermarket Sweep shopping spree will be ongoing.

At Dell Tech Camp, Amsterdam, last week, the company was very keen to assert the importance of acquisitions in its portfolio. Wyse, Kace, and the others were wheeled into Dell’s Software Group and it is clear from the time given to each that the company’s intended message was that it’s growing. It wants to continue to compete with HP and IBM in enterprise, and there are plenty of pre-packaged firms out there it believes it can pick up.

The letter opened by saying Dell’s agreement represents an “exciting new chapter for our company and for you, our customers”. Ultimately, more control in the paws of Michael Dell will define Dell at this transitional point in the company’s history.

“As always, our unwavering focus is on delivering a fantastic customer experience and creating value for your organisation,” the letter reads. “We believe that our proposed new ownership will provide long-term support to help Dell innovate, invest for growth and accelerate our transformation strategy. We’ll have the flexibility to continue organic and inorganic investment and drive industry leading innovation”.

Mentioning the past few years, Dell claimed that strategic execution has been “consistent”, and again mentioned that portfolio it has managed to swell. Considering the enterprise represents the overwhelming lion’s share of Dell’s products, services and technologies – will we see Mike pick Apotheker two from HP’s notebook under the latter’s short lived leadership? Some pundits guffawed when IBM dumped its consumer division, but it turned out to be for the better.

HP, meanwhile, struggles with ‘restructuring’ and was forced to write down the insanity of its Autonomy buy. We’ll say it right now: it will be Michael Dell’s hated box-shifting label for whom the Dell tolls.

Microserver market set to be a money spinner

HP-MicroServerCompanies interested in jumping on the next industry craze might want to have a look at what is being cooked up in the microserver market.

Analysts like iSuppli thinks that shipments of microservers will go up by three times this year. While that sounds like a lot, we are talking about a miniscule market now so a threefold increase is only 291,000 microservers.

But, if the pundits are right, this year will just be the start of something fairly bright and glorious which will start netting huge numbers of sales next year.

The forecast shows shipments increasing substantially each year until 2016. By then, it will represent one-tenth of overall server shipments.

For those who came in late, a microserver uses a bunch of densely-packed, low-power chips. The chips themselves are slower than an asthmatic turtle with a heavy load of shopping, but they can manage to do simple tasks without wasting power.

This makes them ideal for providing contact information on one website user. The bigger web-companies, including Facebook and Yahoo, and the banks are looking at them.

IHS says that Microserver shipments are going up faster than general servers and blade servers.
It will take a while for them to dent normal server shipments. To match that IDC estimates that microservers will have to come up with 8.4 million sales. It is worthwhile remember those are  last year’s figures and that companies were not buying due to the recession.

Already the big names in the chip industry are starting to come up with their plans for this big boom. Both Intel and ARM have announced that they are ready to come up with chips ready. The key was having 64-bit versions, which Intel was tooled up for while ARM wasn’t.

Now it looks like ARM is ready to come to the party and its partner AppliedMicro announced it will have something ready by the middle of the year.

Chief Financial Officer Robert Gargus told Reuters this morning he has been increasingly impressed this month with performance test results on new chips that include 64-bit features widely used in servers.

The company’s shareholders also like such talk. AppliedMicro stock has surged almost 80 percent since September. Gargus however seems to think that the serious revenue from microserver chips will not be around until next year. When they come through, those chips could account for as much as half the company’s business.

Intel is vying for a sizable cut with its Atom-based processor that uses just six watts. AMD snapped up SeaMicro, and Rackspace has already certified the new SM15000 for use in OpenStack.
Qualcomm and Samsung Electronics, which both use ARM’s technology to make chips for mobile gadgets, could also move into the microserver market and create a formidable challenge for AppliedMicro, analysts say.

Then there are the hardware makers who will be wading in for a slice of the pie. All up, there will be a lot of people who will want to make a pile out of technology before the technology becomes old hat.

Intel denies pay freeze claims

IntelIntel’s HQ  in Satan Clara has poured water over rumours that it has imposed pay freezes and left important vacancies open in a bid to save cash.

The comments from the company come following claims that the company was making these cuts in a bid to claw back the cash and make up its falling profits, which  dropped 27 percent in the last quarter.

Earlier this week the reliable sources told ChannelEye there had been “talk” of pay freezes, while vacancies that had been left open for months had yet to be filled.

When Intel was initially contacted regarding these claims, its press machines told us that the company didn’t “comment on rumour or speculations”,

However, it seems someone has had a change of heart – or woken from its media slumber, with the company now issuing a further statement.

It told ChannelEye today: “Just to follow up with confirmation from HQ.  [ChannelEye’s] report is false, there are no pay cuts or frozen hiring.”

We say watch this space.