Issue #199, November 3, 1999  

The Future Of The VAR

By Stephen Lawton

Can it really be November already? It seems just yesterday I saw twinkling Christmas lights and heard people talking about their skiing vacations. (Actually, it was yesterday I saw the Christmas lights; my neighbors never took theirs down. But that's not the point.)
      Soon retail stores will fill (we hope) with buyers putting down money for the latest gadgets. Any gadget fiend would love to own the nifty holiday gifts showcased in this month's issue.
      These products are available from catalog companies, computer superstores and MicroTimes' advertisers, the small and midsize computer retailers and systems integrators. Small retailers are out there - although if you listen to some of the business media these days, you might think everything is megastores. Still, if some small resellers don't change their ways, they might not be out there next year.
     As we said last month, the small retailers are in the sights of big software companies working to eliminate what some consider gray market software.
      Today's retailers are indeed changing; they have to. To ensure they will be around to enjoy the fruits of the 2000 Christmas shopping season, they need to take two actions:
     · Offer more and better personalized service, as well as consulting and network integration, to compete with the big boys, such as Best Buy, CompUSA and Sears
     · Organize and create a lobbying group so their views will be heard inside the marble halls of Washington and the State Capitol in Sacramento
     A year ago, I talked about the changing VAR and the value-added services needed to replace the price-sensitive commodity markets. When premium-priced vendors including Hewlett-Packard, Compaq Computer and IBM sell systems for less than $900 from their Web sites, selling on price alone just won't cut it. And, when you add the "$400 rebates" tied to three-year Internet service contracts from CompuServe, AOL, Prodigy and MSN and the "free" PCs, you realize the real margins are in service, not hardware.
     This year, a lot more resellers have added Web development, network management, integration services, consulting and other value-adds to their menu of services. That's good. They need to offer more than just a white box for the price of a name brand.
      But resellers must do still more. They have to create a trade group to represent their position to Congress and the states, so proposals like UCITA (see Washington Watch for part 2 of Chris Barnett's report on this devastating act) will be defeated.
     Resellers of the world, unite! (Maybe that's a bit much. How about resellers of the country, unite?) This isn't a revolution, it's evolution, and your own lobbying group is for your own protection and your livelihood. The market is changing, and if you plan to survive another year, you must change with it.

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