A future for the computer reseller – but which one?


I had the chance to meet a couple hardware  and infrastructure resellers recently. The reason may be that many of them are facing a sort of an identity crisis right now and are addressing Lemarco because they really need to re-consider what business they are really in and how they should position themselves in the next decade…

Resellers have been facing tough times since years now. It started about 15 years ago  when Dell seriously began competing hem by selling direct. Other PC manufacturs like Compaq/HP responded by first going direct, then by lowering the margins of resellers to a few percent on each PC or piece of hardware sold…

A temporary relief came by increasing their activities in all kinds of business software applications – from security tools to Microsoft Office, Cubic, Sage; some even went into business managment software like Navision or Business One . And it’s true, making money from software licenses was a nice source of income to compensate for decreasing hardware revenue. Some even specialized in developing web sites – which could easily make thousands of euros of revenue for each web site developed.

Unfortunately, revenues from selling software licenses also started to decrease over the years. It’s not easy anymore to make 30 to 40% margin on selling Cubic or Navision in a market where literally dozens are competing each other to death with the same products or services.

On top of that, some started offering accounting software packages for a few hundreds or euros. And as for web development: I’m probably not the only one who regularly  receives emails with following subject line: “Now your own web site for only 499 euros! Call us!” Unfortunately, thise guys are not only doomed to stay poor themselves; they are polluting the market for serious players…

Logically, resellers started to shift their focus on selling services and even hosting (“We are you one-stop-shop ICT partner for all your needs”). And there comes Microsoft, announcing a big shift to cloud computing with online services.

I can  now order Microsoft BPOS (Business Productivity Online Suite) with Office, SharePiont, CRM online for let’s say less than  € 15 a month. I don’t need a reseller for that, only my VISA card…

So clearly and once again, there is a very big challenge for the computer reseller: Microsoft IS planning to take the major slice of license revenue and hosting revenues for themselves. And i see no reason why Microsoft would not start offering support contracts for small companies themselves.

If I were Microsoft and my shareholder value would have remained flat since more than 5 years, I would to that too, as would anyone else.

The real problem is that many computer resellers have not been able yet to re-position themelves and their unique added value towards their customers. That is now the real challenge they are facing. In their panic reactions, some turn their hope in performing a market research among their customers, others will turn to a telemarketing agency, desperately hoping to generate leads to fill their pipeline.

But the real and first proirity for all computer resellers is to perform a profound assessment about their own existing and desired positioning and pereption in the market. Derived from that, they can start building a strong messaging which really reflets the value they bring and WILL generate new leads.

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