No winners in a race to the bottom in the cloud market

Those in the channel competing on price are set for a tough year and will get plenty of warnings about the difficulties of not basing revenues on services.

There will not be many winners in a race to the bottom and the competition, particularly in the cloud market, is increasing.

“There is a real risk that in 2018, as the cloud market consolidates and Google, Amazon and Microsoft continue to assert their dominance, resellers will come into the market and lower their prices to the point where they completely undercut their competitors," said Craig Joseph, COO at intY.

"We know that the IT reseller market is competitive, but our concern is that the resellers that sell on price alone will not offer the service levels required to support customers as they transition to the cloud," he added.

There were some aggressive movements in pricing last year as some of the big and more local players took steps to grab market share.

Joseph is concerned that those resellers that cannot differentiate at all on service will sell the product but not be in a position to add anything else.

The danger is that customers looking for a trusted relationship will be left frustrated at only being able to enter into a transactional one.

“This may include neglecting after-sales assistance and technical support. Customers are of course price-conscious, so if resellers start selling cheap and ignore dedicated customer services, it may become increasingly challenging for those who prioritise top-quality customer support to compete," he said.

"Resellers must ensure that their customers understand the value of good customer service and build it into their proposition, as focusing on customer service can reap dividends in repeat business and further business development," he added.

The other advice coming from intY is for resellers to make sure they work with good distributors that can help them build a wide and value laden proposition for customers.

Computacenter's pre-trading statement issued this morning revealed the growth that is out there for those in a position to help customers get to grips with digital transformation.