Posted by: Eric Wichhart | March 13, 2012

Dell to Acquire SonicWALL in Q2

This is the letter I received from SonicWALL this morning:

This announcement comes on the heals of last month’s announcement by Dell of it’s acquisition of AppAssure. As Dell continues its quest to push into the MSP/VAR space, we will be forced to work with Dell or another vendor like them or be crushed by them as they continue to gather up the best of the marketplace? Will the products lines and services purchased by Dell be better or worse due to their acquisition, that remains to be seen? The real story coming out of this release is that Dell and others like Best Buy are continuing to work towards grabbing a slice of your pie.

One of the scariest scenarios I see is a alliance between Best Buy and Dell. Best Buy is on a quest to garner a strong local presence in the MSP/VAR market with their recent purchase of Mindspring Technologies and their current Geek Squad offerings. Combine that with the hardware infrastructure Dell already has, along with the service lineup they are purchasing and you have a dangerous combination that seeks to first take over larger MSPs followed by the quest to push smaller companies out of business. If you are not seeing these trends in the marketplace, you may soon be a victim of the marketplace.

Companies in the major metropolitan areas will be the first ones coming under attack as there is greater profits to be made in these areas. Companies in the lower tiered markets and rural markets, have a little breathing room as there are less profits to be made in these areas for the big companies, but as competition increases in the major metropolitan areas the larger companies like Dell will move to the minor markets to squeeze more profit into their bottom line.

The key to survive this attack is to move your relationship position. As you may have heard from many in the industry, you need to move beyond the customer/vendor relationship and build a trusted adviser relationship with the customer. So no matter where they go for services, Dell, HP, Microsoft, or Cloud Company XYZ, you will be there as their CIO or CTO to help them make the best decisions for their company.

A good way to start moving in this direction is to start thinking of offerings that may not be the most profitable to you, but are the best for your client, such as Office 365. By moving your clients to Office 365, you are giving that portion of your relationship over to a big vendor, as Microsoft bills the client directly. Many have complained that you are basically offering up your Rolodex to Microsoft and at some level this concern is true, but this is a great opportunity to build that trusted relationship. Microsoft is currently not going after the MSP market, so you are safe from them stealing your clients. What I would worry about more is the Dells and Best Buys, if you do not offer Office 365, they will. You wait, very shortly you will see Best Buy advertising products like Office 365 in their stores and advertisements. Your clients visit those stores and see those advertisements. They may just drop off at the counter and ask what this is all about, the Geek Squad guy tells them how wonderful of a product it is and the client wonders to himself “Why didn’t my IT guy tell me about this?” So he signs his company up, now Best Buy has his information, starts pounding him with advertisements stating how they can give them great support for next to nothing. The next thing you know you have lost a customer because you didn’t offer a product that you were afraid of offering because Microsoft might steal your client.

The goal is to leverage vendors like Microsoft, get out of the hosting and repair business, let them do the work and you help your clients make the right decisions. That is what Financial Advisers have done for years, they do not offer the investment accounts, they tell you which ones are the best and get you hooked up. You either pay them a fee based on your investment amount or they get a commission from the product vendors they sell you. You still get paid, you just have to change your way of getting paid.

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