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VARs need to carve out their own market niche

VARs have to create their own specific market niche and exploit it because of increased competition from IT vendors.

There's no denying that business for VARs has been shifting from primarily selling hardware to providing a wider blend of IT services and packaged solutions. Industry watchers say that is no surprise, but the trend highlights the need for VARs to create their own specific niche and exploit it.

Carving out their own piece of the market is critical for VARs as competition increases from IT vendors that continue to expand their menus of services -- some of which directly overlap with VAR offerings, said Charles King, principal analyst for Pund-IT Inc. in Hayward, Calif. "One way to mediate that complication is to encourage VARs to create their own exclusive solutions that aren't offered by the vendors," said King, adding that it can help minimize crushed toes and hurt feelings.

For VARs, decreased reliance on hardware sales is certainly the wave of the future, he said. "I'd say that's also par for the course, especially in the SMB space where margins are thin and getting thinner," King said. If a VAR expects to survive, developing solutions seems like the first order of business, he said.

The fact that vendors from Cisco to HP to Oracle -- as well as the VCE coalition of VMware, Cisco and EMC -- all promote more integrated and pretested hardware-software stacks means that some of the work deploying and tweaking data center hardware will be eliminated over time. VARs that derive a lot of their money from that implementation work need to take heed. The hope is that faster implementation times will free them up to provide more strategic services -- and possibly ones with higher margins.

"The problem with ever more advanced hardware and software solutions from the vendors is that there is less and less need for VAR support for that hardware," said Rob Enderle, principal analyst with the Enderle Group in San Jose, Calif. "This forces the VARs to seek other additional forms of revenue to stay viable."

About the author
Todd R. Weiss is an award-winning technology journalist and freelance writer who worked as a staff reporter for from 2000 to 2008. He spends his spare time working on a book about an unheralded member of the 1957 Milwaukee Braves and watching classic Humphrey Bogart movies. Follow him on Twitter @TechManTalking.

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