Channel says we'd rather sell servers than public cloud

The majority of resellers still make most of their money through traditional hardware and software sales, although most now offer something-as-a-service.

According to research released by analyst firm Canalys, 96 percent of resellers provide IT-as-a-service to customers but for most providers it still only contributes less than 25 percent to the overall business.

"Product resell is still the most important business model for more than 60 percent of channel partners," said Rachel Brindley, channels research director at Canalys.

"But they rate the importance of their managed services to their businesses very highly, just behind reselling products," she said. "Fifty-eight percent of partners also believe that their managed services business is more profitable than reselling hardware and software."

Brindley said that managed services isn't necessarily exclusive to new technologies like cloud computing and that it also applies to conventional products.

"Managed services comprise new-world IT as well as old-world IT. Printing, for example, is now heavily driven by managed services contracts," she said.

Despite the enthusiasm for managed services, public cloud copped criticism in the channel survey.

"The perception of most partners is that reselling third-party cloud services is less profitable than reselling hardware and software. This also reflects the fact that most channel partners see the top two cloud opportunities as productivity applications, such as email, and infrastructure-as-a-service (IaaS), both of which are under growing margin pressure," said Brindley.

A statement from Canalys said that channel companies fear that public cloud providers will skip resellers, with 62 percent of respondents saying this is the biggest challenge in selling IT-as-a-service.

"Vendors developing go-to-market strategies for cloud must ensure they are not increasing competition with their established partners, but recognise that this is typically delivered as part of a hybrid IT offering," said Canalys' senior analyst Alex Smith.

Forty percent of partners also cited cloud security and shortage of skilled labour as hurdles in their sale of cloud services.

The results of the study were released at the European edition of the Canalys Channels Forum in Cannes on the south coast of France. The Asia-Pacific event will be held November in Shanghai, China.

CRN is a media partner of the 2014 Canalys Channels Forum APAC in Shanghai on 4-6 November.