Avaya predicts further channel rationalization

More channel rationalization is in the cards as vendors pursue further cost reductions in order to take advantage of the “80-20 rule,” according to IT telephony and wireless specialist Avaya Inc. But the vendor is still looking to partner.

Managing director of Avaya for South Asia, Carlton Taya said although the majority of its business in the region was generated by 20 per cent of its resellers, the channel remained key to the company’s recent market success.

“Like other vendors, we find that 80 per cent of our business Asia-wide is generated by 30-40 companies who have worked out their value-add,” Taya said. “But we continue to investigate the best way to take the product to the market, so we are keen to hear from resellers working in our space.”

Avaya, which abandoned its direct strategy for a two-tier channel scheme about 18 months ago, has found the two-tier proposition a winner. The company is now looking to boost its reseller numbers in order to leverage its push into the IP telephony space.

“We don’t really want to put dollars into distribution, our dollar investment is focused on R&D,” Taya said. “But as long as there is a value proposition in the channel, we are going to use it to get more coverage in the market.”

Taya said that as distributors stepped up efforts to add value, resellers that did not concentrate on services would simply die away.

“There’s not much margin to share around and that means that margin is taken away from the reseller, making it hard for them to survive,” he said. “Resellers who don’t work out their value proposition and focus on product moving just don’t stand a chance.”