Monday, May 23, 2011

DOTC, TheDeathOfTheChannel - More From 2011 Global MPS Conference

I am  a big fan of those ad-hoc meetings around the watering hole, in the lounge or on the bus to Harley Davidson.

You never know who may end up sitting next to on the bus ride over.

This year some of the offline talk revolved around the OEMs - indeed, we had Xerox, HP, Ricoh, and Canon all on one stage fielding questions.  I don't think this has ever happened before.

One conversation that struck me was about 'control' or better yet, the lack of control the OEMs have relative to just 2 years ago.  Control over the industry, over the channel, over the customer.

I detected a bit of anxiety, bitterness.  Granted, the relationship between dealer and OEM has always been strained, right?  And over the years, we've all heard the common complaints, the same gripes  -
  • "manufacturers quotas are unrealistic and they keep changing"
  • "they are shifting their warehousing cost to us"
  • "why is your service rate so high"
  • "how can I compete when your toner pricing is so high?"
  • "CBS vs. the Canon dealer"
  • "RBS vs. the Ricoh dealer"
  • "direct vs. the dealer'
  • "Are they redefining an Enterprise Level Account, again?"
  • "thank goodness for back-end and MDF..."
But this time it was different.  This time, as I listened, waftng through the angst was something different.  A bad smell.

Difficult to pinpoint. But then it hit me. It was the stench of fear.

You see, these self-proclaimed 'independents', were not simply complaining, they were scared.  For a second, I felt badly as they seemed to prefer ignorance over fear.

In the end, all I felt was pity.

----------------------
Before we start rallying around the independent dealer flag, OEM's have had their share of challenges with the channel.

Does any of this sound familiar?
  • Flipping OEM generated leads into non-OEM placements 
  • Starting with OEM toner, only to slip 'more profitable' third-party toner into the service agreement later
  • Allowing MDF to float through the 'general fund' and into a multi-vendor event.
  • Much, much more...you know I'm right
Lot's of friction, and that isn't all bad.  You've gotta have Fire, if you want to change anything.

Dealers want control of their customer relationships, to micro-manage all opportunities and go for profit.

OEMs want to control market share - move more boxes/toner - and control the choices.

It's about Control: Through MpS, the OEMs are losing it, but not without a fight.

You see, it is my contention, that all the big guys, I would say 3, are moving or already have moved to a direct selling model. Either buying up or ignoring the traditional channel.

That means HP, Xerox and Ricoh; and by Ricoh I mean RiKON.  And by Xerox I mean Xerox/Global.  And by HP I mean the 800 pound gorilla who is too big to fail.

These big 3 need to define your version of MpS.  They must control the version of MpS that best fits their overall goals, like gaining back 27% of their business, and inject their definition into the consumer vernacular.

Direct.

How long before ACS gets into your accounts?  Or how big is an Enterprise Account anyway?  I mean, if I sell 89 Edgelines, is the account mine or does it belong to Mother Blue?  Things that make you go...HUH?

And that's equipment.

What about Pure MpS?

The machines have no control over you, unless they change the rules, control the meaning of MpS and control the distribution of that meaning.  The Word unfiltered or reflected through the prism of independent MpS.

If there is only a direct channel, OEM MpS can institute:
  • 1:1 rip and replace, in their brand
  • control the narrative
  • guarantee consistent service
  • move more gear, not reduce the MIF
  • No more complaints about toner pricing
  • No more worrying about dealers flipping leads
  • Comp models remain 'hardware centric

When you engage clients with an intent to, "...actively manage towards reducing costs associated with documents by reducing the number of machines and the number of prints..." - you chill the OEM's to their core.


Back to the Basics of War -
  1. Shape the battlefield, define the time and place - redefine MpS in their likeness
  2. Consume your enemy into an ally - buy everyone
  3. Execute overwhelming firepower - dump money into the plan, manage the (online) perception
The independent dealers, the ones who can walk into an MpS prospect without ANY manufacturer loyalty, because MpS does not demand such a thing, are poised to respond intimately with clients.  

The OEMs are big, powerful and heavily scaled up - but it won't be enough.  Controlling the channel is a red hearing, the ultimate consumer see's more today.

When they get the message and understand that old business processes and new employees don't require print, color or otherwise, the won't print.

They won't need a copier or a device and the OEM's may get caught re-arranging the deck chairs.











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Reactions:

4 comments:

  1. Well done Greg, let's not forget about the independent MPS/MSP consulting firms who help keep the OEM's honest.

    Bill Ford
    NewField IT

    ReplyDelete
  2. Hi Bill -

    Thank you for reading.

    Yes, all the indy's are in the same boat.

    I started this little article before the conference.

    It was crystallized while I was there.

    ReplyDelete
  3. And again an independent consulting and sofwtare development firm is bought by a vendor..

    ReplyDelete
  4. Larry UpthegroveMay 31, 2011 at 7:24 PM

    This evolution is being driven partly by device manufacturing companies, but also (more importantly?) by breadth of products/services. If I deal with an OEM, I can get workstations, blades, servers, printers/MFDs, and have all of them serviced by a single vendor. This will put pressure not only in the sales channel, but also in trying to get a presence at the customer. This will really be a challenge for the independents.

    ReplyDelete