Channel Rides Mobility Wave

Wireless and mobile solutions are hot buttons for channel partners right now, and distributors are helping them get more skin in the game. Managing Editor Al Senia says VARs need to realize where they can find margin.

December 8, 2008
By

Al Senia

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This may go down as being a disappointing year economically for the channel, but it's ending by striking an interesting note: Mobility. Smartphones have been all the rage this year; netbooks have made wireless mobility all the more affordable; and within the last few weeks two major distributors, Ingram Micro (NYSE:IM) and Tech Data (NASDAQ:TECD) have been pushing into the mobile product arena with new initiatives.

Mobility has been a challenging area for channel partners because margins on much of the hardware are extremely low and (in the U.S. market, at least) wireless carriers pretty much control the revenue generated by mobile phone hardware sales and monthly subscription fees. So while some channel partners sell such products such as Apple's iPhone, the new RIM BlackBerry Storm and Nokia's new N97, there isn't a whole lot of profit in it for them. The real money for the channel is in the applications development for such products or in the service and support if they are part of a larger mobile or wireless computing solution.

However, there are some indications this could be changing. According to a recent report, Acer is planning to launch its first branded smartphone in the first quarter of 2009. Acer prides (and differentiates) itself on being a 100 percent channel company, so it seems likely this new product will move through channel distribution. (Currently, distributors typically supply just unlocked smartphones to channel partners.) The main issue is whether solution providers will get to play in the Acer smartphone game, or if it will be sold at discount through big retailers. (Think iPhone and Best Buy.) It' is also possible Acer will release the phone in overseas markets before the U.S.

Another consideration is that Acer is competing forcefully with HP and Dell for notebook and PC market share. One of the hot mobile areas for channel partners is embedded computers that have wireless technology built in to access the mobile networks of service providers like AT&T, Sprint and Verizon Wireless. It's a solution aimed at the mobile workforce, especially in the retail, healthcare, manufacturing and transportation verticals. Might Acer leverage its smartphone in some way to bolster its notebook sales?

The mobile workforce area is becoming so hot right now that a division of Ingram Micro recently expanded its mobile product portfolio.  launched an initiative designed to make it easier for VARs. Ingram also just launched a new portal to help channel partners activate mobile services for business customers. Tech Data is also stepping up its visibility in this area. The company has bolstered its wireless business unit help channel partners sell network wireless LANs and WANs.

It seems likely the channel will end up getting more involved in smartphone sales and service, especially as these mobile devices add more computer functionality. However, right now channel partners are better off limiting their mobile world to application development, support and hardware devices like embedded notebooks and routers, where there is a chance to make some margin. According to a new Gartner report, worldwide smartphone market growth slowed to 11.5 percent in the third quarter compared to one year ago. The firm sees sales growth ebbing, although the iPhone and BlackBerry continue to dominate the market. Even so, with the worldwide recession impacting sales, the carriers aren't likely to share a lot of smartphone revenue with the channel anytime soon.

(Al Senia is managing editor of ITChannelPlanet.com.)

TAGS: wireless,mobile,iPhone,smartphones,carriers



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