Channel Trend: Providers Increasing Linux Support, Again

Business are adopting Linux and the channel is responding by supporting Linux. Although many analysts talk about the vendors driving the channel, it is the customers that drive the channel; it is the channel that drives revenue and profits for the vendor. Microsoft did not make channel millionaires. Nor did Novell, Sun, IBM or HP. The entrepreneurs who built and managed their businesses individually made themselves millions and and aggregately made vendors billions.

This customer and channel-centric perspective is one of the key points I always stress when I teach Executive Conversation's Executive Focused Sales--Channel. The channel will do just fine without you or your products. Will you do as well without the channel?

Microsoft's delay on Longhorn is no big deal to the health of the channel. But it is opening up the channel to Linux vendors, especially Novell. This loss of support in the channel will be very expensive for Microsoft to fix. Every provider/developer that migrates to Linux will have to be recruited back at great expense and effort straining budgets and reducing ROI.

Scott Karren, The Channel Pro

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Web Logs and Blogging Pick Up Momentum

I am still amazed that my clients do not know what a blog is. I work as a consultant in the High Tech and telecommunications industry but my clients are often the last to take advantage of the new opportunities created by their own products. I know I should not be impatient with them since the same thing happened with email and the web.

Channel marketing organizations have been among the last to adopt these tools (except for Microsoft, which was always out front in its technology adoption.) Heck, even the spell checker on Blogger does not recognize the word. However, with blogs making the front page of the Seattle Times, I hope we are getting past that critical mass.

The article identifies Dave Winer and local blogger Robert Scoble as Gurus but misses the point a bit with pejorative terms like "crusading individuals ranting away at their keyboards". Perhaps the Times should read Scoble's "Why I Blog" post.

For myself, I write two blogs to create a community among intelligent people who have similar interests, one about channel marketing (The Channel Professional) and one about cruising the Puget Sound (The MC30 Quay Cat). My 11 year old son blogs about his 6th grade class and my 8 year old blogs about his imaginary world.

Yes, blogs are becoming mainstream, but there are still many untried ways of using the technology to communicate and drive change.

To Scoble, Winer and other bloggers, I invite you to come out with me on Quay Cat and we can discuss blogs, communication and business while cruising the beautiful Puget Sound.

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Channel Programs: 2004 POWER Channel Awards

It is the time of year when CRN and CompTIA are giving awards for the best channel programs. These awards are based on surveys of channel providers and recognize the vendors who had the most popular programs. However, past popularity is not the only criteria that matters when evaluating channels. At Channel Ventures, we wanted not only to recognize popularity, but also to publicly recognize the vendors that are using their programs to increase sales productivity and change the way channels are managed. Therefore, we are pleased to announce the POWER Channel Awards.

Channel Ventures' POWER Channel Awards are based on our review of vendor programs as published on the web, discussions with VPs and Directors of Channel Sales and Marketing, and interviews of channel providers. The Power Channel Awards recognize vendor excellence in the following five areas:

Product: Compelling product correctly positioned is the foundation of any program
Objectives: Clarity eliminates conflict and increases impact
Working Capital: Helping channel providers build businesses creates loyalty
Expenses: Removing marketing obstacles drives markets
Returns: Sustainable programs require accountability

Channel Ventures presented its nominees for the POWER Channel Awards at CompTIA's Breakaway conference in Orlando on early August and will publish the winners in this blog, the Channel Professional in early October. More important than the individual winners are the ways they are changing the way the industry approaches channel management.

The Channel Pro


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Channel Development: Keeping Costs in Check

Michael Kuehner, a managing partner at Cognition Partners, a VC that I met last week at an open house for Emanation Software (previously CashPoint), a small Seattle software company, mentioned that "the trick to channels is finding a way to manage them without having costs eat your lunch." While this is true even for large companies, controlling channel costs while launching or developing a channel is especially hard for small and startup companies that lack infrastructure, process and policies to manage and grow a channel.

When we look at the projects we have done over the last 15 years, it seems that Michael hit the nail on the head. For the last couple of weeks, Bill Weir and I have been reorganizing our services into five basic products. What we found was that all of our projects were about controlling costs and increasing the ROI on channels.

Yet simple cost controls often cause more damage than they cure. Limit channel research and channel alignment suffers. Decrease field headcount, and mindshare drops. Cut support and partners flee to competitors programs. Recruit on the cheap and support costs skyrocket. This is why our projects usually focus one or more of the following services: Channel Research, Channel Strategy, Channel Communication, Channel Account Management, and Channel Recruitment.

I agree with Michael, much of the investment in channels is underperforming. Channel development is complicated and expensive. Without precise management, these large investments can be swallowed up by the market without an measurable impact on a vendor's business.

The Channel Pro


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Channel Development: Microsoft Accounting Channel Implications

Microsoft has a new, super secret accounting package for small businesses. I have been approached by several people inside and outside of Microsoft about this product. Based on these interactions, I see several warning signals for Microsoft on their channel development for this new accounting product.

1. Customer Targeting: The fact that they are somewhat randomly approaching small businesses shows lack of planning in the launch process. Launch research needs to deliver critical product AND channel data to the vendor. Unless the process is well thought out and implemented, the data is compromised.
2. Channel Conflict: I hear that channel development needs to make sure not to conflict with Great Plains product sales. Good luck. This reminds me of US West telling me to launch their DSL product but not cannibalize ISDN. Channel conflict will rage between these products if their customer targeting is not rock solid (see point one.)
3. Product Acceptance: Microsoft seems to underestimate the reluctance to change. It is not the minimal price of the software that keeps me from changing. I do not change my software for core business practices unless my trusted advisors (CPAs in this case) recommend it and unless there is a great migration path. Microsoft knows how to do this-- remember the migration path for Excel from Lotus? Heck, some of my soft key strokes and short cuts from Lotus still work in Excel.
4. Channel Development: Even vertical approaches to the channel will fail. Microsoft recognizes the need to get the accountants on board, but their approach to the launch says they are missing the key inflection points. The trick is not a broad recruitment of accountants, but the recruitment of the right accountants.

Channels are a requirement for this product for three big reasons. First, small businesses are a fractured and divers market that is almost impossible to reach except through intermediaries. Second, every professional small business relies on outside accountants and will not take actions against their recommendations. Third, the motivation to change is not high since existing solutions are already in place.

I know there is a market need for better accounting software and believe that Microsoft, just like with Word and Excel, can produce better software than its competitors. However, without a crystal clear channel strategy and implementation, acceptance of the product will be slow. The shotgun approach to the beta and the channel development endanger the success of the product launch.

Scott Karren, The Channel Pro

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Channel Strategy: Provider Power Still Strong

My VP, Bryan Johanson, wrote an article for the Channel Ventures column in Ziff Davis; ChannelZone this week; The Solution Partner's Secret Weapon. Bryan addresses the issue of channel competition with seemingly invincible OEMs (such as Dell). With the tables so overwhelmingly in the OEMs favor, how can the small channel provider compete? Simple. Personal, in-depth customer insight and solution alignment. Read the whole article next week at ChannelZone. ( will update the post with a link to the article when it goes up.)

The Channel Pro

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What's your realtionship with your customers?

In his book "Re-Imagine", Tom Peters writes about the evolution of the customer relationship in business. He touches on some of the same territory as the cluetrain manifesto.

Before industrialization, vendors were inherently close to their customers. In the marketplace of those times, it was a one-to-one relationship.

Then with industrialization vendors became cut off from customers, focusing only on pushing products at them.

By the early Sixties, marketing was coming into its own. Corporations rediscovered customers and began to 'research' them. But the relationship was all about "data" and theory.

In early Eighties, Peter's book "In Search of Excellence" wrote about the need to 'Stay Close to the Customer' and corporate managers who got out to meet real live cusomers in the flesh.

By the beginning of the Twenty-First Century, in large part because of internet technology, the relationship had changed to 'Becoming One with the Customer' and managers focused on integrating with, and getting even closer to, the customer.

Peter's says that in 20 years, vendors will be inseparable from the customer, and we will have come full circle. The cluetrain manifesto calls this the 'wired marketplace."

What's your relationship with your customers? Are you prepared for the wired marketplace?


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