THE CHANNEL IS ON FIRE: STEVE BRAZIER OF CANALYS

Taipei hosts the eighth edition of the Canalys Channels Forum   APAC 2019

The eighth edition of the Canalys Channels Forum APAC 2019 was recently held in Taipei, Taiwan, that brought together major technology vendors, distributors and resellers to discuss industry trends, forge new business relationships and create sales opportunities.

The event showcased how the channel has recorded another spectacular year despite all the turmoil in the world’s politics and economy. Asia stood as the strongest part of the global economy, though the picture within the region has been mixed. Hong Kong is disrupted by protests, China is slowing because of the trade war, tax cuts have not yet helped India to rebound, while Malaysia and Thailand remain confused politically. There are bright spots too - Taiwan and Vietnam are benefitting from a shift in manufacturing out of China while the tech industry in Japan is red hot, fuelled by major sporting events including the Rugby World Cup and soon the Olympics.

Canalys is a platform where strategies of various vendors help in creatinga platform on platforms. This year’s event attracted senior members of the channel to nominate and select people on their team, who would not normally be invited, in recognition of their future potential. The event succeeded because of the participation and support of twelve distributors including Dicker Data, Innovix, Networld,Bluechip,VSTECS, Rhipe,Redington,Techdata,Soft Solutions,Sysage, HCL Infosystems and Synnex  and other technology partners including CDW, World Wide Technology (WWT), SoftwareOne, SHI, Insight, Computacenter, Bechtle, Atea, Econocom and Sirius. As a group, these companies grew 11 percent in terms of revenues over the past 12 months.

Steve Brazier, CEO – Canalys delivered his opening keynote address to bolster the confidence of channel partners who might be feeling dwarfed by large global system integrators, which continually eat away the market and expand aggressively through acquisition.“Had you invested in the [major global system integrators] five years ago, you would have doubled your money. It’s been a very strong performance. The channel is on fire, and investors are recognising it.”

He further continued, “But if there’s one slide I want you to take away from this presentation and reuse, and think about, it's that the IT channel has comfortably outperformed the global system integrators - but nobody knows it! Nobody talks about it, whereas, other analyst firms who have downplayed the importance of channel businesses.”  

“The channel around the world is doing extremely well. The big partners and the smaller partners from every survey we do in every country is comfortably outperforming the performance of technology vendors and the economies they work in. We are a sector on fire. The only thing holding you back is your confidence to believe in yourself.” He said.

“If you are not growing at 11 percent, you are losing market share,” Brazier said. “But we have spoken to many of you over the last three weeks and most of you are growing over 11 percent and you should be very proud.” 

The channel opportunity is rich

According to Canalys data, there are 16.7 billion connected devices. By 2023 it is expected that number to hit about 32 billion, aided by the rise of 5G and Wifi 6. They might be cars, devices, smartphones, cameras, robots, vacuum cleaners, lawnmowers, obviously PCs and other technology products.

Steve said, “Each of those products need to be sold, maintained and need to be delivered - perhaps as a service. That’s the job of the partners. It’s a very simple core mission - deliver these devices that connect to the internet and maintain them. As that market doubles, if you go down that journey with the industry, you’re going to do very well I promise you. Equally, as we see a doubling of devices, just think about the amount of data and how that data needs to be managed, stored, backed up, have disaster recovery procedures in place and security in place.”

Another opportunity that Canalys continues to encourage partners to think seriously about is security, any of the partners focused on security will do very well, he said.

“Since there has been an arms race of innovation, way too much for me to cover since then: VPNs, firewalls, building redundancy into systems, but I wanted to highlight a few of them that perhaps you haven’t thought of.”

Steve spoke of the social engineering threat of security, noting that individuals who spend enough time eavesdropping on or building face-to-face trust with target company employees will eventually gain the information they need to access both physical properties and internal systems.

Steve emphasized that one of the trends he sees - an easy business for partners to get into - is to get into physical surveillance; building surveillance. This is an area where China now leads the world. Because physical security systems are shifting toward implementing technologies such as biometrics which can also make accurate assumptions about where individuals are on a premises, Canalys expects the convergence between cybersecurity and physical security to grow very soon and very quickly.

Steve also spoke on the subscription frustrations, an emergent cloud billing dilemma for vendors and partners, failed SaaS models, partner marketing maturity, AI while rounding out his presentation with some predictions for the future in the channel and technology.

These included speculations that Google would have to make a considerable hardware or software acquisition in the next 12 months if it intends to gain a greater share of public cloud competitiveness; a new taxation on deliveries of online-bought consumer hardware.

Most people in the West underestimate how China is advanced in many technology areas starting from artificial intelligence, Smart Cities and cell computing. The impact of the trade war, particularly on Huawei has been applied to reduce its dependency on American components inside of the smartphone and almost on all American components. There are a lot of abuse that goes on Facebook and Twitter because people are hiding names that are doing.

Tian Beng Ng, Senior V.P & G.M. Channels APJ, Dell Technologies spoke on offering end-to-end channel financing for partners, “Partners can realize benefits through the Dell Working Capital Solutions program in the form of adaptive credit capacity. This gives partners the flexibility to scale up and down on credit limit – based on business dynamic and seasonality. It also provides extended payment terms to partners. It helps partners manage cash flow and win bigger solutions & complex deals. Dell helps in bringing the innovation and help the channel. It is a big change in innovation as we allow them to use the market development (MDF) funds across all the different product lines in the DELL family.”

Sumir Bhatia, President, Data center Group, Lenovo says, “We have emerging great technologies that were brought into our portfolio and we were talking about hyper converged and software defined, and we are working with our partners around that. At Lenovo, we provide very good customer outcomes in a flexible way. In India we have seen very big growth in the business, with a strong double digit growth. This year Lenovo has entered the Gartner Magic Quadrant as a challenger brand, under storage which is quite a remarkable achievement and we are going to keep pushing very interesting developments in the data center group. Another amazing highlight is in the 500 supercomputer HPC; we are number one and we have continued to be number one. So, the supercomputer 500 are the 500 Top installations supercomputer in the world. We have 174 installations, out of the 500, making us number one and the biggest.”

Daniel Fields, ED Services Sales & Marketing, Lenovo said, “We have seen the share of services as a percent of the total revenue grew 150%. With our growth plan to serve the multi-vendor approach, our managed services business in India, has grown multi folds.

This year, 60% of the channel revenue will actually come from services and the message we have here is really to embrace the strength and progress. The services and our capabilities around these trends have boundless opportunities.” 

Awards of Excellence

The awards ceremony recognized partners who have demonstrated exceptionally strong profitable growth. There were six partners from across Asia who got recognised, among them were three Indian companies including On Sai Corporation receiving the Growth partner of the year award, Galaxy Automation receiving the Diversity and inclusion partner of the year award and the overall Candefero partner of the year 2019 that went to SHRO Systems.

The event saw the Economic cyber stupidity index which assesses the top 20 largest data breaches around the world since 2013, and it looks at some of the stupid things that a lot of the big corporations do.

With the scale of data breaches, we are not looking at the sensitivity of the data, as well as the negligence of the corporations involved. Every day we give away a lot of data ourselves for free, whether it's on social media or on LinkedIn. Even on our business emails we give lot of information to complete strangers. But the companies are not only just collecting this data, but they are collecting a lot more sensitive data in terms of passport numbers, bank details, credit card information even after sub, pause, passwords.

Expecting huge amounts of data bonus to target to do better targeted advertising or to personalize customer experiences, they are not taking security seriously enough and you may think it's just that we are not taking seriously ourselves by calling it the stupidity index, and actually look at some of the examples. It really is just negligence. This highlights the importance of evolution and the need for innovation in cybersecurity. 

Forecast of the Future

The prediction is that there will be a lot of negotiations, but something will happen either within HP or Xerox or maybe that someone else comes in and tries to do a destructive move but very likely in the next 12 months something will happen, and most likely they will merge in some way.

The main takeaway of the event is the community and it will be an ongoing journey.