Eight years after Amazon Web Services hit the scene, distributors finally appear to have answered one of the toughest riddles of modern times: how the hell does a distie add value to cloud computing?
In recent months, Distribution Central and Westcon have revealed cloud marketplaces, Ingram’s solution is waiting in the wings, and Avnet continues to expand into white labelling infrastructure-as-a-service.
What is driving this? Distributors have found their traditional roles increasingly redundant in a virtualised supply chain. They’ve had to find new ways to be useful.
Most of these models are still in their early days and include some pretty incredible caveats unheard of under the old model.
One of the most innovative examples is Distribution Central’s (DC) success with pre-integrated solutions it calls PODs (which stands for ‘product on demand’). Its RecoveryPOD, for example, includes CommVault, NetApp and Fujitsu.
While the distie is hiring its own engineers and creating blueprints for high-end solutions, chief exec Nick Verykios says DC is not taking away integration work from resellers.
“This debate has been going on for 10 years. My competitors say DC is doing all that work, which means any reseller can sell any solution to any customer. What a load of bull. That would be true if we were doing laptops and PCs, but we’re doing high-end collaboration and comms, storage, ultra-complex infrastructure. We’re not selling commodities.”
The vBlock from partners Cisco, VMware and EMC – VCE – marked a shift towards integrated appliances based on reference architectures as a way to save the customer time and money on testing and integration. Verykios says most resellers would go broke if they had to put together the solutions DC has created.
But DC’s progressive approach has created new problems. Some resellers have checked out DC’s solutions, taken the list of materials and looked around for cheaper prices. “We are trying to work out how do we stop them going off and shopping it. There are instances where we have had to shut off access.”
Another change is that DC’s marketplace will promote vendors it doesn’t represent. For example, Cisco and VMware, essential components to several solutions, are not DC vendors. Clever in one sense, but also a sign of the times: a distributor using its resources to distribute a vendor for free. Verykios points out that he still gets paid for vendors he doesn’t represent through sub-distie deals.
“I probably have more VMware engineers in our team than some of the VMware disties. That’s not having a dig; I’ve just got all this expertise,” Verykios says.
In August, Avnet launched its white-label cloud through Hitachi Data Systems. It includes infrastructure-as-a-service (virtual server and storage, cloud storage, virtual desktop and backup), content-as-a-service and cloud service for Microsoft SharePoint and email.
It’s a very different strategy to Westcon, whose marketplace provides aggregated billing and support services for resellers. Westcon’s MD Dave Rosenberg said at its conference in August that it won’t become a cloud provider because it didn’t want to compete with resellers and vendors.
In the longer term, there will be a lot of pressure facing disties running their own IaaS services. The vendors have huge advantages in brand recognition – and in price, because they can just use their own kit. White-label services for cloud are not so attractive for the smaller reseller. Any business worth its salt is going to ask the question: who is really hosting my data?
The reseller will have to defend the distie or the distie’s white-label supplier against the likes of AWS, Google and Rackspace.
Most of these solutions are focusing on mid-market and up – where margins are still possible. No one seems serious about tackling cloud software for SMB, as Express Data’s Express Online webstore did. Unfortunately, EO didn’t survive the Dicker Data merger. From 2 July, the EO website directs all inquiries to Dicker Data’s home page – where there’s barely a trace of cloud software.
Marketplaces seem to be the future, and it’s not just disties who are launching them. Xero rebranded its 300-plus app directory at its user conference in August.
But the greatest threat to disties are new players such as 9 Spokes. The company is a well funded marketplace-cum-marketing tool that doesn’t only offer integrated billing and single sign-on for a handpicked list of cloud programs; it includes a dashboard of widgets that will display key metrics from any of the cloud programs bought through 9 Spokes.
And 9 Spokes has a call centre in New Zealand to handle support calls for all apps on its marketplace to help with integration, exchanging data and app selection. It has already signed a distribution deal with Deloitte Private and allegedly has agreements with two large banks.
Disties are catching up to the cloud. Whether there’s room for all of them is far from certain.
Sholto Macpherson is a journalist and commentator who covers emerging technology in cloud
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