From the trenches: Wider opportunity

OPINION: These days, the key to this game is identifying a piece of technology early and taking full advantage of it before your competitors do.

The problem is you have a reasonably small window of 'margin goodness' before every man and his dog suddenly wants a piece of the action.

On one hand, your business and possibly a few others are the only suppliers in town and you’re raking in the dollars selling something that is valuable to your customers and profitable for you.

On the other, the manufacturer is working hard to build a channel, setting up reseller training and certification programs, signing new partners left, right and centre, and suddenly everyone’s cottoned on to what was once your little pot of gold.

A discussion with XSI Data Solutions boss Max Goldsmith for our WAN cover story (see page 20, Issue 185) got me thinking.

Deep down Mr Goldsmith does not want other resellers and integrators to know what he’s up to.
 
You see, after eight delightful months, XSI had already started to build a sizeable business selling Juniper/Peribit WAN optimisation wares.

It is Juniper’s only Elite-certified partner and Goldsmith tells me that despite Juniper’s partner drive, the reseller would be looked after.

XSI dropped Peribit product into 25 sites, earning it around $4 million in sales revenue last financial year. And at a reasonably good margin to boot!

Although still relatively in its infancy (US$314 million in expected sales globally this calendar year), WAN optimisation and acceleration technology is a compelling proposition.

Australia is a particularly relevant market for this type of technology due to high bandwidth costs.

A lack of understanding in the general channel about technology such as WAN optimisation, of course, plays really well into XSI’s hands, but probably not for long.

The players in this market - the likes of Juniper, Packeteer, Australian outfit Exinda, Cisco, Radware, F5 - are quite keen to train many channel partners on their gear.

My questions are: Where does the vendor draw the line? When you find a compelling and profitable piece of technology, how do you maintain your margins when competitors start selling the same offering? Email me your thoughts on this subject.