ChannelTrends: Predicting the Next Vendor Acquisition

Winston Churchill once said, “There is nothing wrong with change, if it’s in the right direction.” How prophetic a statement that was, and continues to be in today’s IT channel. Almost every week an announcement touts a major acquisition or merger and, while some of these deals may seem inconsequential, the sum total of all these changes is altering the channel landscape significantly. Many of these corporate unions bring benefits for solution providers, such as more comprehensive solution and service options, or a reduction in partners programs they need to monitor.

On the anniversary of Harry Houdini’s birth, it’s only fitting we discuss a little magic; at least from the mergers and acquisitions side of the IT channel. Several of this week’s announcements seem to hint at the potential business performance enhancements coming from consolidation, but are mere slight-of-hand or will they truly benefit solution providers and their own organizations in the long run?    

Paying a Premium for Communications 

Kicking off the week was news that AT&T would buy T-Mobile USA from Deutsche Telekom for approximately $39 billion, potentially expanding their network by 34 million subscribers. AT&T says this deal will enhance their network capacity and improve quality for both companies' customers. By leveraging both organizations’ communications technologies, the acquisition could enhance the service provider’s communications and data systems reach and depth. AT&T also should benefit from the reduced sales, marketing and other administration costs by combining the businesses.

With the promising growth in tablets and other mobile technologies, this deal appears to be a market grab. If AT&T can keep a majority of the T-Mobile customers through the close of the deal (no sure thing with the market implications), the revenue opportunity is significant. Regardless of your opinion of either company, everyone wants worldwide Internet access for their iPads, Galaxy, Xoom and other devices. If AT&T can create the largest network while improving its infrastructure and technology through this acquisition, their investors will be pleased with the move.

How will this news affect the channel? Solution providers can benefit by partnering with these telecommunications companies and device manufacturers to offer mobile workplace systems— including cloud solutions that address their individual business needs.

While that news filled the technology news sites, Polycom’s acquisition of Accordent Technologies also hit the wires. This will enable the unified communications vendor to add a number of video content management and delivery solutions to their portfolio. That brings more comprehensive communications platform options to solution providers, which ensures a healthier competition (and better programs) amongst partner programs.  It also expands the Polycom market opportunity by a projected $500 million (the video management segment) and gives them a place in a thriving technology segment.

The HP Strategy

Are some of the acquisitions an attempt to keep ahead of the competition in race to be the top dog? It would be hard to believe HP is scooping up companies to stay ahead of Apple and IBM, but that strategy has proven successful for other vendors, such as network giant Cisco. As pointed out by Forrester Research CEO George Colony this week in an eWeek article, Apple is expected to surpass IBM in revenue this year and could overtake HP within two years if current growth projections play out. 

HP has been busy in the acquisition market lately, starting with the 2001 purchase of Compaq and extending to its latest prizes: Palm and 3Par. In between, the tech giant has pulled a myriad of software and hardware vendors into its fold—more than 50 in the last ten years!  Some industry experts have even started to speculate on the next purchase, including The Software Advice Blog author Christopher Baum. He points out an SAP or Adobe acquisition by HP wouldn’t be a surprise, though smaller vendors with middleware of complementary technologies to round out the company’s portfolio are more likely.

But the question most solution providers have is how mass acquisitions, such as HP is carrying out, will make them better partners? If structured properly for the IT channel, these organizations can streamline the product portfolio and reduce not only the paperwork, but overall management of the vendor relationships. That can reduce the time required by VARs and MSPs for sales and technical training, and allows them to attain higher partner program levels without total purchase increases    

Brian Sherman is founder of Tech Success Communications, specializing in editorial content and consulting for the IT channel. His previous roles include chief editor at Business Solutions magazine and industry alliances director with Autotask. Contact Brian at [email protected].