As technology has advanced, hardware has often found itself playing second fiddle to software. Yet hardware is continuing to be at the heart of many solutions on offer across the Channel. Resellers, MSPs and distributors are still finding their customers require new hardware to complete digital transformation projects and embrace new ways of carrying out tasks.
So, what areas should channel companies explore when looking to grow their hardware offerings? When evaluating your existing portfolio, the best starting point is to examine what hardware is in demand, and what hardware is in decline.
Adam Roberts, product sales manager, Agilitas, described the trends he has identified within his company. He said, “We’ve seen a much higher demand for spares such as system boards, hard drives, storage arrays and controllers. Our customers are looking to extend the life of their tech, not only to ease cash flow but also to meet sustainability goals, so by purchasing spares they are able to get more from their hardware.
“We’re also finding, particularly for customers supporting the public sector and government contracts, that they have to upgrade certain kit to meet client requirements but lead times from manufacturers can be 18 months. Therefore, we are experiencing a huge increase in a range of in-life hardware as this can cut the lead times down to as little as a week, enabling them to progress faster with projects.
Roberts pointed to recent data from Gartner that found global PC shipments have declined to record levels, with shipments in the final quarter of 2022 dropping by 28.5 per cent to 65.3 million. He explained, “This is a result of the anticipation of the global recession, increased inflation and higher interest rates, leading to companies reconsidering where to spend their money and extending PC lifecycles where possible.”
Roberts concluded this is why service-based offerings are booming. He said, “Hardware-as-a-service is becoming increasingly popular for businesses, with the opportunity to lease or licence hardware from an MSP and agreeing responsibilities in a service-level agreement. Not only does this enable companies to access the latest technology, but it’s much better for cash flow which is especially important in today’s economic uncertainty.”
Darren Garland, managing director, ProVu Communications, has found handsets are still in demand, despite the growth of laptop-based communications solutions. He said, “Handsets are very much still alive. Our handset sales continue to grow year-on-year and in the lead up to 2025, we see this will only continue. The other product lines we are seeing a huge demand for are IP intercoms and routers which have now become our second largest product lines. UPS devices are high on the agenda too, the demand for these is starting to grow as people start to gear up for the PSTN switch off.
“We are seeing less demand for conference phones as people continue to adopt more Teams-based solutions. In this case, people are switching to more personal conference devices or video conferencing solutions.”
That chimed with the view of Steven Try, channel manager for the UK and Ireland, Snom, who pointed to portable conference phones as an area of opportunity.
He said, “Flexible working continues to impact what hardware businesses are using for their communications, as they look for solutions that meet the needs of employees both at home and in the office. Devices such as portable conference phones and headsets are helping to create a seamless, work-from-anywhere experience.
“More businesses are also prioritising DECT-enabled solutions, to guarantee maximum mobility and operating range on days that they are working in the office. Wireless DECT handsets can be used so that employees are able to move away from their workstation while on a call.
“DECT base stations can also support the use of many devices at one time, which is important in settings such as care homes and hospitals where connectivity is king. Devices that don’t offer this type of flexibility are falling out of favour.”
The move to newer generations of connectivity is also impacting on the hardware market, with the shift from 2G and 3G to 4G and 5G, as well as the move from FTTC to FTTP and the arrival of improved Wi-Fi standards requiring investment in new hardware. Lee Broxson, sales director, Jola, said, “4G and 5G routers are in demand across the channel and in almost every vertical market our partners operate in. As intelligent mobile data becomes faster, more reliable, and more widespread, end-users are choosing it over fixed-line connectivity solutions for its operational and commercial advantages.
“A good example of this is the PSTN switch-off. There are millions of endpoints across the UK that will use 4G and 5G connectivity over more expensive SOGEA connections. 3G sunsetting is also driving demand for 4G and 5G services. There are still millions of devices connected to 3G networks in the UK which need to move to 4G and 5G or the services will simply stop working.”
Craig Walker, vice president of cloud services, North Europe, Alcatel-Lucent Enterprise, added, “Thinking about what is in demand, I’d say the underlying network infrastructure: as we move more to IP, there is an increasing demand on networks, especially when we look at Wi-Fi. And the rationale for that is that in the old days, a network investment would last you five to seven years. In contrast, a Wi-Fi access point today will last you 18 months – if you are lucky. The demand for speed, for numbers of users, and the number of applications that are being pushed over Wi-Fi, the security requirements - all of these elements make Wi-Fi such a fast-moving market.
“We have gone through Wi-Fi 2, 3, 4, 5 and 6, and we’re already talking about Wi-Fi 7. The speed of change and demand over Wi-Fi driven by the fact that as more and more things go wire-less, people change the way they deliver those services. So we really need to finance networks differently, and that’s why network as a service is a real boon to managed service providers.”
Developing a winning offering
As these market movements have demonstrated, there is still plenty of space for hardware to thrive within the Channel. So, how can resellers and MSPs develop winning hardware offerings?
Roberts, from Agilitas, explained how channel companies are having to be strategic about how they tackle challenges to the supply chain. He said, “The ongoing supply chain issues have drastically impacted product availability, making it even more important for resellers and MSPs to develop winning hardware offerings. One of the main areas for hardware growth is centred around networking infrastructure, connectivity and their associated security.
“Businesses are also demanding more DevOps resources, as this can help them to accelerate their digital transformation efforts by incorporating automation, customer experience and AI.
“As a result, resellers and MSPs need to look to build hardware into the broader offerings and improve the overall customer experience. They can do this by building out more XLAs rather than the traditional and linear SLAs that they may have relied on in the past.
“The redeployment of hardware, especially laptops and desktops are also really topical at the moment. Buy back schemes and responsible lifecycle services that ensure no electronic waste goes to landfill can all help enhance hardware offerings and provide an improved customer experience.”
Garland, from ProVu, explained there is no need to overcomplicate things. He said, “Make sure you’re making the most of what your distributor or supplier is offering! Whether it’s securing NFR units to test the devices for yourself, interoperability testing to ensure the hardware you select will work with the system or products you’re already offering, or having these items shipped direct to site ready to plug and play. All these things can help resellers and MSPs to develop a winning hardware offering which complements their business.
“When looking at expanding their offering further, resellers should think about the bigger picture. Where else can they go with their hardware offering? What naturally fits with their customer’s requirements? It could be something as simple as offering headsets with desk phones or softphones. Or, as companies move towards an all-IP solution, there’s huge potential in offering upgrades to access control and IP audio and visual solutions. The best thing is that with the right services in place, adding such items to your portfolio can be simple. We even offer installation services to wrap around these items. If you’re looking to broaden your offering, it’s always worth having a discussion with your supplier to see what they can offer and how they can best support you.”
Try, from Snom, emphasised the importance of bundling solutions together. He said, “A winning hardware offering will include everything from classic desk phones to IP DECT terminals, headsets and speakerphones. The security and voice quality of these devices should also be considered as prerequisites.”
Walker, from Alcatel-Lucent Enterprise, agreed. He said that resellers need to look at “the whole picture of how they’re going to deliver the services to the end user”. He added, “They can then start the discussion about a Wi-Fi network that’s fit for purpose, a backbone experience that’s fit for purpose, a softphone client and a UC experience that’s fit for purpose.”
Sustainability under the microscope
With climate change front of mind for many across the UK, sustainability is a key topic for manufacturers and suppliers. As such, the initiatives that could make a difference are increasingly in the spotlight.
Garland, from ProVu, discussed the shifts he is seeing regarding plastic usage. He said, “We are seeing far less plastic being used in our manufacturer’s packaging; and some adopting the use of recycled plastic in the production of their devices. In house, we are recycling as much as possible and repurposing returned items as spare parts to reduce waste.”
Walker, from Alcatel-Lucent Enterprise, explained that “everything has to be recyclable and zero landfill” and discussed to Alcatel-Lucent Enterprise’s decision to have an external assessment by EcoVardis. The EcoVadis assessment, Walker explained, is focused on 21 sustainability criteria grouped into the categories of sustainable procurement, environment, labour and human rights, and ethics.
He added, “ALE strives to deliver ongoing improvement in a changing market. Corporate social responsibility and sustainability are part of what defines us as a company. We are committed to protecting the environment by operating in a way that helps ensure a sustainable future for all.”
Roberts, from Agilitas, explained, “The UK government’s commitment to net zero carbon by 2050 is having a huge impact on public and government contracts. In its Greening Government ICT and Digital Services Strategy, it specifies procurement standards that include carbon neutral suppliers, 0 per cent to landfill and 100 per cent traceability of ICT at end of life. Therefore, hardware offerings that can provide this information are going to be more favourable and, in some cases, imperative to winning tenders and contracts.
“In other sectors, there is also an increasing expectation for manufacturers and suppliers to enhance their sustainability initiatives and re-shift their focus to the circular economy. These businesses need to consider how to track their upstream and downstream supply chains and carbon emissions, as well as drive towards a climate-positive workforce and carbon-neutral operation.
“The biggest opportunities are around collaborating with like-minded partners, as partnering with best-of-breed companies will help ensure that firms can remain agile, competitive and quickly adapt to the pace of today’s market.”
Roberts said that Agilitas is looking to reduce its own carbon footprint by automating some roles, using electric vans to transport inventory between logistics hubs and minimising staff travel through hybrid working policies.
Trust, help and support
To succeed in this crowded and fluctuating market, distributors, resellers and MSPs must ensure they are identifying the best hardware vendors to partner with. Roberts, from Agilitas, explained, “The way distributors, resellers and MSPs identify and select their partners has changed dramatically in the last few years. They have taken a new approach to choosing who they work with and what their priorities are to make sure they align with their own values.
“Having the right partner, not only benefits the business and its impact on the planet, but also who it does business with and the calibre of its clients. To address this, these businesses need to continue to find new ways to strengthen their businesses through strong relationships with their vendor partners.”
Roberts emphasised what is at stake should a reseller or MSP remain tied to partnerships that are no longer working. He said, “Without moving forward and leaving behind incompatible partnerships there is no progression, and businesses have quickly learned just how beneficial an aligned partnership is to achieve long-term growth.
“With so many factors at play, the act of building a sustainable culture has never been more important, so striving for these like-minded alliances has become vital.
“Resellers are also shifting their focus to delivering a first-class customer experience and aligning with reliable partners is key to ensuring the value to the end user is reflected across the entire supply chain. If one part of the supply chain faulters and lead times are pushed back, it damages the customers’ ability to maintain their customer base.”
Garland, from ProVu, provided a distributor’s perspective on selecting hardware partners. He said, “For us, it’s always been about forming good relationships with our vendor partners. We work very closely to ensure we communicate efficiently and have a good understanding of product developments, manufacturing timelines and technical knowledge. The key things we look for are high quality products, a good level of support and competitive pricing.
“For resellers and MSPs, the requirements tend to be slightly different. Selecting the right vendors to work with will likely depend on platform compatibility, suitability for the end user, price point and for some, what financial support is available.”
Broxson, from Jola, discussed the importance of differentiation. He said, “It’s important to work with a vendor that allows you to differentiate your offering and helps you to find and win profitable deals. Selling solutions as opposed to box shifting will give you the edge when you’re in a competitive bid situation. Jola’s routers are suitable for mobile broadband and large-scale IoT rollouts. Devices are pre-configured with the Jola App, allowing auto-configuration.
“As a result, there was no need for manual configuration on-site; the routers were delivered to site, ready to install, saving valuable time and set-up costs. To bolster security, Jola preconfigures security measures into the devices, to prevent third parties from accessing the routers.”
The business model that underscores all partnerships is also increasingly under the microscope. Walker, from Alcatel-Lucent Enterprise, said, “Well, you’ve got to be able to look at two things: the features and functions and technology itself, but also the business model and how it can be financed and purchased.
“On the technology side, look for technology that employs open standards. By doing so, you know that your tech choice will be as future-proofed as possible, able to take on new software without needing to be ripped and replaced, and won’t be obsolete anytime soon.
Walker added that channel companies need to look holistically at the whole stack. He said, “Hardware will always be part of the overall deal. In many cases, the hardware is enabling the value-creation in other areas. If you look at IoT sensors now, they are pence, but it is what you do with that hardware that is meaningful to the customer. If you are the guy doing the software integration into a business process, that’s where the money is.”
Try, from Snom, added, “Distributors, resellers or MSPs should consider a few key factors when choosing a vendor as a partner. These include how trustworthy the vendor is. [Relevant questions will be:] do they have a long warranty on their products? How innovative are they with product design? And what level of expertise does the vendor offer to makes the sales process easier? If the vendor has a partner programme, for example, this can serve as a great resource for training and support.”
An enduring backbone
So, where will hardware fit within the channel in the long-term? Roberts, from Agilitas, said, “Hardware will continue to be used in new ways, with vendors competing on customer experience to ensure that their products are easier to use and scalable in the longer term.
“Whatever the trend, hardware continues to be the backbone and the need for reliability and maximum uptime is going to be crucial – any downtime will seriously impact the customer experience. With shifts in customer preferences towards as-a-service purchasing, we can also expect to see ongoing synergies between software and hardware with emerging technologies blurring the lines between the two.
“As a result, hardware vendors will have the opportunity to create new business and revenue models to address future customer pain points and needs.”
Try, from Snom, added, “With the deadline for the ISDN switch off fast approaching, telephone networks all over the country will soon turn fully digital, and organisations will have to rely on SIP technologies for their business communications.
“This means that moving forward, businesses will need to find ISDN alternatives, such as VoIP phones, which will enable them to make calls on a global scale using devices with an internet connection. These IP-based phones have several advantages when compared to traditional phones, including increased flexibility, potential for scalability, and greatly reduced costs.”
Broxson, from Jola, explained, “Hardware has a key place in the channel for the long term. Edge devices, routers and gateways help to provide connectivity solutions that support the applications today and will drive the technology and applications of the future.”
What is important is that channel companies continue to be smart about their hardware offerings, and ensure solutions fit with existing technologies.
Garland, from ProVu, explained, “Hardware is pivotal in our everyday life; it will remain an important piece in the Channel. To prosper it will need to seamlessly integrate with existing systems and become part of the wider smart solutions which are transforming the way we control and engage with our office and home environments.”
This market report appeared in our April 2023 print issue. You can read the magazine in full here.