EMC: Private clouds could wipe out half the Australian channel

The Australian channel is likely to shrink by as much as half as resellers start selling consolidated technology to build private clouds, said David Henderson, EMC's general manager for partner and alliances at the EMC Inform event in Darling Harbour, Sydney.

EMC has started selling vBlocks, an integrated server, networking and storage platform jointly manufactured with Cisco and VMware.

While the platform consolidated three technologies, the channel wasn't likely to contract by a third, said Henderson.

"I don't think it's the third of the number. I think it's a half," he said.

The major distributors estimate the size of the Australian IT channel at about 5,000 partners. Roughly 500 have high technical competency from EMC's view, said Henderson.

The move to private clouds could change those numbers dramatically. "You'll see that 500 increase to 750 or 1000 and the community decrease to 4000" or less because of the emphasis on technical competency, said Henderson.

Vendor relationships or technology skills will not drive consolidation - "it's how the customer works", said Henderson.

Customers could no longer have a two-partner strategy for getting quotes. Instead they will want "open-book margin conversations" to understand their resellers' financial stability as well as technical capability, said Henderson.

The flip side is that operating private clouds "will drive greater intimacy" between customer and reseller, said Henderson.

Consolidated IT environments required much higher levels of trust in a reseller to maintain and operate than the typical heterogenous data centre with technology from many different vendors, said Henderson.

"You can't shop around for cloud," he said.

Resellers like IVT Systems and Pepperstorm have already merged to give them the skills to sell integrated platforms like vBlock.

EMC conducted research several months ago during which the company asked customers four questions: Who do you buy your storage, virtualisation software, networking and servers from?

The survey showed that most customers bought all four products from the same partner.