Most solution providers have added managed services to their portfolio to one degree or another. But, arguably far too many of them are still dependent on reselling products as their primary source of revenue. A new survey of 1,372 IT professionals conducted by Spiceworks, a provider of tools for IT teams, finds that the rate at which organizations are replacing IT infrastructure has become quite extended.
The Spiceworks survey finds that 70 percent of companies use desktops for five or more years before replacing or decommissioning them, and 24 percent use them for seven or more years. Nearly half (48 percent) use laptops for five or more years. Company-owned tablets and smartphones typically last two to four years, the survey finds.
A full 75 percent of companies also use printers for five or more years, and 37 percent of organizations use them for seven or more years. Well over half (58 percent) also report they use desk phones for seven or more years, and 22 percent keep them around for 10 or more years.
Things are no better when it comes to the data center. The survey finds 75 percent of organizations use servers for five or more years, and 32 percent use them for seven or more years before replacing or decommissioning them.
Complications for resellers
Most resellers operate within the confines of a specific geographic region. It doesn’t take a math genius to figure out the total addressable market within a specific range of zip codes. It quickly becomes apparent that the number of organizations in the market to buy new IT equipment in any given quarter is quite limited. Add in all the local and national resellers competing for that business, and it becomes clear there isn’t going to be enough revenue from product sales to go around.
Things only get more complicated as more of those organizations start to rely on cloud applications. Not only do cloud applications make it possible for them to rely on older equipment longer; it’s now only a matter of time before more organizations are essentially renting IT infrastructure within the construct of a device-as-a-service offering.
“It’s more than apparent that solution providers that focus on managed services represent the most economically viable portion of the channel.” @SmarterMSP #MSPs
Most savvy solution providers have already concluded that the primary reason to resell any product is to drive the services opportunities that product enables. Margins on products such as PCs are already razor thin. In fact, PC vendors are now doing everything they can to bundle software with hardware to make it more compelling for organizations to invest in new PCs.
Naturally, there are still a fair number of so-called lifestyle resellers that need to generate just enough profit to pay their bills. But, it’s more than apparent that solution providers that focus on managed services represent the most economically viable portion of the channel. There may always be a need to resell a product for one reason or another. But, most solution providers already view reselling of products as the means to a more profitable managed services end.
Arguably, the best way now to drive an upgrade is to bury the cost of the product within a managed service. In fact, for most MSPs the cost of supporting older infrastructure is a whole lot more trouble than it’s worth. We may not have reached the point quite yet where it’s worth giving away new equipment to drive a services opportunity, but as an industry we are starting to get much closer than many IT vendors would care to admit.
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