With the profit margins on wireless LAN equipment in danger of declining, channel partners may want to look into wireless LAN managed services as a way to boost business and generate extra revenue.
In the weeks and months since the ratification of 802.11n, many wireless LAN vendors, from leaders like Cisco Systems and Aruba Networks to startups like Aerohive Networks, have been dropping the prices on 802.11n and introducing new low-priced access points. Falling prices mean lower margins for channel partners.
Paul DeBeasi, senior analyst with the Burton Group, said managed services are a good way of counteracting falling prices and guaranteeing a steady stream of annuity-based revenue.
"The margin is usually going to the vendor, especially with vendors lowering prices," DeBeasi said. "So if the reseller can do a good job in setting up boundaries with customers, it might be a good opportunity to get additional margin and get some follow-along business."
In general, VARs and other channel partners end their engagement on a wireless LAN deployment after selling the equipment, designing the network and installing the gear. They leave it to the customer to manage the network. However, some VARs are looking to continue that customer engagement.
Wireless LAN startup vendor Meraki, for instance, is tightly focused on selling wireless LAN managed services through its 180 channel partners. The vendor's architecture consists of a cloud-based wireless controller that is optimized for managing the physical on-premise access points. This is in contrast to the on-premise appliance-based controllers that most other vendors use. This approach makes it easier for partners to offer managed services because they don't have to try managing controllers remotely or hosting controllers in a network operations center (NOC).
"The channel receives a cut of the sales [of cloud controller licenses]," said Meraki CEO Sanjit Biswas. "Many of them choose to layer services on top of that, too -- for example, 24/7 help desk, physical replacement services. We do the heavy lifting of running the service, and we manage multiple data centers, but [the partners] own the relationship with the customer."
DeBeasi said there are certain vendors whose wireless LAN architecture is better suited to managed network services than that of other vendors. Meraki is one, he said. Aerohive, with its controllerless access points, is another.
"Some vendors are definitely not suited, like Cisco and Aruba," he said. "Their controllers not only handle network management, but they also forward packets to the data plane. So they touch every packet. You couldn't put that controller in the cloud."
On the other hand, DeBeasi said, vendors like Motorola, Trapeze and Siemens have controllers that can be reconfigured so that access points do their own packet forwarding to the data plane, so managed wireless LAN services are more feasible with their technology.
Excalibur Integrated Systems, a wireless networking VAR based in Hendersonville, Tenn., has been selling managed wireless LAN services with Aerohive hardware for more than a year, according to director of business development Shane Moore.
Excalibur does business with Motorola, Cisco and Aruba, but Moore said that only Aerohive's controllerless architecture is suited to managed services.
"If you purchase a solution from someone [other than Aerohive], you typically already have a controller, and there is not a good way to manage that controller over a wide area network that I have found," he said. "There are some ways you can do it by creating VPN tunnels to the customer, but most customers are not that excited about creating a VPN tunnel to a partner. And if they have that kind of expertise on staff, they are going to manage their own wireless network anyway."
With the Aerohive technology, Moore is able to manage his customers' wireless networks remotely using Aerohive's HiveManager network management system, which sits in his NOC. The management console can communicate with Aerohive access points at customer sites.
"In the past, if a customer called me up with a wireless problem, I would try to help them out," Moore said. "If I'm doing that over the phone, I'm going in blind because I can't see what they're doing. With our hosted customers, it's a piece of cake for me to go and find out what's happening in their environment because we have access to their access points."
Moore said he doesn't yet see his managed services offering as a profit center, but it is important to his business.
"What it does allow me to do is sell access points more easily. It enables a shorter sales cycle. But I also stay in touch with my customers. A lot of times, as a reseller, you may sell a nice solution and the customer is fairly self-sufficient. You may lose contact with the customer because they're doing their own thing. And the next time they go after a solution, you may not be the first one in mind for them or you're just another reseller. As a hosted reseller, I'm part of their outreach. We're a trusted partner who is familiar with what they're doing. If they want to add access points, I'm going to be the first one to know."
DeBeasi said there is money to be made in wireless LAN managed services, as long as channel partners are careful to protect themselves. He said partners should be careful to define the services they will provide and make sure they have the resources in place to provide those services.
"[Partners] would need to provide 24/7 support, and some may not have that," he said. "But if you're providing a service for a small-to-medium business and there's a problem, that business needs to be able to pick up the phone at 2 a.m. and figure out what's going on."
Providing that support economically could require some economies of scale, so partners need to have a good number of customers in the pipeline to justify the expense of hiring experienced support specialists.
VARs must also define what kinds of services they offer when they take over management of a wireless LAN for a customer.
"They'll be handling help desk calls, and sometimes it's not the network," DeBeasi said. "It's the laptop or the software in the laptop or a virus on the laptop. How do you diagnose that and say, 'We don't support laptops?' They have to be careful that they know how to quickly isolate a problem and make sure they don't get drawn into it if it isn't their responsibility," he continued. "The challenge is how do they do that and remain profitable and not get consumed by the day-to-day problems that any IT person can get consumed by."
"If they can set boundaries and quickly diagnose problems and put these borders around what they do and don't do, and if they can solve those problems quickly," he said, "then VARs can make money off this and be profitable."
Let us know what you think about the story; email: Shamus McGillicuddy, News Editor