Where Do VoIP Vendor Mergers Leave VARs?
True story: an executive from an SMB VoIP (voice over Internet Protocol) vendor company approached me at the Internet Telephony show in fall 2007 and asked, "What do you think are the biggest trends in VoIP this year?" "Vendor mergers and partnerships," was my response. At the time I was asked that question, Avaya had been acquired by Silver Lake and TPG Capital, Mitel had recently acquired Inter-Tel, NEC Unified had acquired Sphere Communications, Google had acquired GrandCentral, 3Com was bought by Bain Capital, and Digium had acquired Switchvox. Within a few weeks of our conversation, that SMB vendor (Allworx) was acquired by another vendor (PAETEC Holding Corp.).
In addition to the mergers and acquisitions in the VoIP market, there were a few strategic VoIP partnerships in 2007 that achieved similar goals. Cisco and Linksys merged their channel programs; ShoreTel and AudioCodes partnered; Objectworld strengthened its partnership with Microsoft; and Avaya, Juniper Networks, and Extreme Networks continued to tighten their best-of-breed offering. While not every partnership and acquisition happened for the same reason, one theme was prevalent: VoIP vendors don't want to be pigeonholed as SMB-only or enterprise-only providers, and they don't want to be viewed as providing only point solutions. Like you, they want end users to know that they offer highly scalable total solutions.
Mergers Can Be A Win-Win, But Proceed With Caution
So, what do these mergers, acquisitions, and partnerships mean for VoIP VARs? For the most part, it's a no-lose situation for VARs. One of the primary goals of most mergers and partnerships is to help VARs from both companies market and sell the other company's products. To bring about this change, vendors offer co-op funds and other incentives to their VARs. If you're a Cisco VAR, for example, you're now automatically enrolled as an authorized Linksys reseller, and Cisco will give you special incentives to sell the Linksys products to small businesses.
Financial incentives are great. But, there are a couple of things you need to consider before adding a new product line to your repertoire — even if the new product line is the result of a merger, acquisition, or vendor partnership. If adding the new product line means ousting another vendor partner, you need to consider the ramifications to your existing customers. Will you still be able to service them? What if they plan to expand? How will your new VoIP products complement the previous products you installed? If you don't have good answers to these questions, there's a good chance your customers will find another VAR that sells the products you used to carry.
Another point to consider is exactly how complementary are the products between the two companies. Sure, they may have new stickers that make them look compatible, but that means little when it comes down to installing the products and making them work seamlessly. At the very least, you should see a working demo at your vendor's lab. Also, be sure to check a few references of customers who are currently using both products in their facilities. Get the scoop from the customers as well as the VARs that performed the installs. Ideally, you should set up the products at your facility and use them yourself before selling them to your customers. Also, keep in mind that it sometimes takes years for two company cultures to work together effectively, which needs to happen before the products can be thoroughly tested and made interoperable.
If your VoIP vendor recently announced a merger, acquisition, or partnership, it could mean good news for your company. Just make sure all the kinks have been worked out between the vendors and their products before you make the leap and take on a new product offering.