The pillar of success

Try speaking to any networking player about networks and you will struggle to keep them focused on the pipes and raw infrastructure which previously formed the backbone of the networking landscape. Talk is of opportunities in security, VoIP, managed services, thin clients, storage, Unified Communications, and WAN optimisation, to name a few. However if resellers want an ongoing relationship with customers there is one underlying deployment needed to exploit the aforementioned opportunities: the network.

There is no point owning a car if no-one has built the roads for you to drive on, and the network is the essential IT infrastructure which is hosting a growing range of IP-based offerings.

“The infrastructure business is still there,” said Graeme Reardon, regional director for A/NZ at Cisco’s SMB division Linksys. “However there are new technologies emerging such as Unified Communications, VoIP and Software-as-a-Service which resellers need to get trained up on to have the basic skills.”
Reardon’s comments are indicative of the message Linksys and Cisco have been pushing out to the market in recent years. There is little doubt Cisco is the networking market’s most significant player, with a hugely dominant marketshare.

Discussing Cisco’s fiscal results for the first quarter of 2008, the vendor’s CEO John Chambers said: “Unified Communications continued to lead the way with revenue growth above 70 percent year-over-year. Storage was up more than 20 percent…and security growth was in the mid teens,” said Chambers. “Our second wave of advanced technologies that includes video systems, application networking systems, etc., is now approaching the US$2.5 billion run rate and grew in the mid 30s year-over-year from a revenue perspective.”

Cisco is alive to the opportunity of leveraging its networking legacy to grab business in the next wave of technology. It is a direction which networking resellers would be well advised to note, alongside the developments of the networking market and the many other vendors either branching out or into the space.

The networking landscape is rapidly changing with legacy players such as Cisco not only changing focus, but non-networking players moving into the space. In September database giant Oracle acquired network optimisation technology maker Netsure Telecom. At the time of the deal analyst Peter Goldmacher said: “We believe that this purchase could signal Oracle’s willingness to branch out from data management into the network and systems management space.”

In October software giant Microsoft released Office Communicator 2007 (its voice-data-video communications client), Office Communications Server 2007, and a 360-degree videoconferencing system called Roundtable.

This transformation is likely to leave a crowded vendor marketplace, but resellers will need to ensure they have the skills in place, regardless of the vendor set they carry.

“We continue to offer such training and when we do this we go into a lot of detail and are finding that resellers are keen to learn more and find out about these new technologies,” said Reardon. “Resellers are always looking for new revenue opportunities and they need to be able to add value and more margin. There are some resellers out there who are happy with their lot, but 90 to 95 percent of our reseller base is looking to get skilled up on these
new technologies.”

Reardon said talk is still around everyone still wanting to go wireless, but on the LAN side Linksys is also seeing strong growth with
end-users wanting more offerings which they can integrate with other solutions.

“Resellers have to get skilled up outside of the base infrastructure network and should also add services to their portfolio, and the amount of sub-100 resellers doing this is increasing. It enables resellers to add revenue streams that they have not been able to access before,”
he said.

Reardon claimed Linksys has a good channel business and with Cisco as its sister brand it ensures that the firm has full coverage across the SMB space.
“Linksys plays in the sub-100 space and if Cisco comes down there will be some overlap. However in that one to 99 users space we are fairly good and we make sure we get the right offering for our customers.”

Reardon also pointed to Linksys’ and Cisco’s investment on its consumer business which is growing in strong proportions, with marketshare growth.

“Our resellers have the customer base, they are the trusted advisor and they need to take advantage of this and get them locked in,” added Reardon. “The networking landscape is getting stronger and stronger and is the platform for everything which is getting
rolled out.”

Kevin Bloch, director of business and technology solutions for Cisco in A/NZ said: “As resources virtualise, the importance of the data centre will grow, enabling new opportunities for service provision such as Software-as-a-Service. Organisations will need to consider deployment of wide area network (WAN) technologies such as WAAS (Wide Area Application Services) to provide effective remote access to applications and service residents in the data centre.
“This will be the forerunner of “green networking”, where power efficiencies, other efficient utility utilisation, and emission footprint reduction will be critical.”

Bloch added “Web 2.0 generation” has driven the use of video, both on the public and private Internet.

“When collaborating, people want to “see” and if that’s not possible, they want a rich user experience. Video provides this and is one of the key drivers behind recent phenomena such as YouTube and TelePresence. We will start to see the prevalence of IP-based video delivery in the areas of entertainment, security, surveillance and retail applications,” added Bloch.
Scott Janney, manager advanced technologies at security and networking vendor Juniper Networks, said: “The market is in need of higher performance networks, as businesses accelerate and roll out more applications. The infrastructure has to keep pace and in turn we are seeing a lot of consolidation
and virtualisation.”

Juniper has openly targeted the higher-end, top performance network market. “We want customers who view the network as the business and are looking for complete reliability, fast and intelligent networks,” he said.

“VoIP and wireless are massive parts of the industry and the network is operating as the enabler. In the future security and the network are going to become more closely intertwined. We are seeing the niche security players being acquired. Security will not continue as a standalone part, it is going to be fully integrated into the network. People will get big, fast, safe and intelligent networks.”

Janney added that resellers like dealing with Juniper as its product portfolio can be taken and put together as part of a reseller’s value proposition.

Ross Cochrane, CEO of distributor Express Data, echoed the focus on advanced technology and security: “The underlying driver in the networking landscape is a more ubiquitous, yet secure way of communicating. The leaders are aspiring for cross platform, cross device, anytime and anywhere communication.

“From a technology perspective, WAN optimisation will continue to progress, Wi-Fi networks will expand into the broader community and this will mean a continued emphasis on security.”

Cochrane said convergence will also continue to drive changes, be it voice and data convergence, or storage and network convergence, with key vendors Cisco, Microsoft and Symantec pushing this forward. “I also think that Citrix has signalled its intent to take a more dominant position in the market with its acquisition of XenSource. 2007 has been an interesting year, but I think next year will also have its shares of twists and turns,” he said.

Concerning the success of resellers, Cochrane cited an undoubtable opportunity is in the SMB space, where there has been a lot of the focus from the channel.

“It makes sense [for resellers to focus on SMBs] – something like 98 percent of businesses in this country fall into this space, it accounts for more than half the revenue and the turn-around times are often shorter than with enterprise sales. You have to work hard for the business but in terms of runs on the board, SMB will continue to get a lot of attention,” said Cochrane.

“Obviously security, access, network optimisation and reliability continue to provide ongoing opportunities for services annuity income for resellers who can demonstrate their value through managed services and support offerings.”
Unified Communications will continue to be a focus of Express Data said Cochrane, as it addresses so many challenges the resellers’ customers face as they contend with increasingly sophisticated environments and a larger mobile workforce.

“Virtualisation is another key technology that will evolve in the future with more players, such as Microsoft, coming into play. These kind of technologies that help customers make better use of their data centre resources, roll out more stable business continuance and enhance data security, will succeed,” added Cochrane.

Jim Christie, vice-president for global sales at WAN optimisation vendor Exinda Networks, said there is a need for more applications that can run better.

“There are a whole load of applications which are time-sensitive and this has driven people to consolidate servers and move towards thin client applications. Users know if something is not working and if they are processing orders and it takes time, they are not going to be happy.”

Christie also supported the notion that a lot of resellers have been migrating from doing infrastructure to security, onto WAN acceleration.

“The infrastructure is in place and security has largely been fixed, but the WAN acceleration side is still a problem and means an opportunity for resellers. There will be a continued transition away from fat clients to an environment that is robust and competent,” said Christie.

Mark Geddes, ANZ country manager for Exinda Networks, added: “If you have been a predominantly VoIP player you need to understand what is in that pipe. Security players need to have visibility of what is going on in the network and so do the resellers that manage networks.”

Ed Havlik, ANZ country manager at infrastructure management vendor Avocent, said: “A major trend in networking is the ability to have the technology in place when the network goes down. The biggest cost in networking is the administrator costs.

“There are the tier-one players who are offering best business practices and there are other players focusing in vertical areas. You are seeing more vertical focus from networking resellers across the board.”

Speaking locally, Havlik added that Australia, compared with the whole of APAC, is very much an early adopter market.

More than ever the networking landscape contains one of the most diverse and broad sets of players in the IT market. Vendors are repositioning themselves for the next wave of network-based technology and resellers need to be doing the same. If resellers can obtain a base of customer through their networking skills, they will be well positioned to supply this glut of network and IP-based technology.