Someone messaged me to take a look at a post of mine from 2017. M&A at the time was mainly on the vendor side – cable mergers, the Birch thing and more. How did it turn out?
Birch sold to Fusion who then went bankrupt, which is a very Birch thing to do.
Charter/Spectrum got big; is now offering cellular and won a bunch of federal dollars to extend its network in the name of the Digital Divide.
CenturyLink was just merging with Level3 then. They got bigger – but nothing in our space gets better – even with a new name. It became a huge mess and now they are selling off parts – like the data center business and some of the ILEC and perhaps the European assets. New CEO coming as Storey takes a bow. Oh, and they re-branded as Lumen.
Verizon bought Yahoo and AOL — and lost their shirt – and sold them for pennies on the dollar. They started yelling 5G in 2017; they are still yelling and buying spectrum and trying to get a variety of tech and spectrum to work for the promise of 5G.
TPX and Nitel sold to investors and have not been the same since. Windstream went bankrupt – and is still trying to recover.
Sprint was for sale in 2017. Last month T-Mo sold the Sprint wireline network to Cogent for $1.
In 2017, Mitel bought Shoretel. Today they are solely focused on premise PBX, having sold the cloud assets to RNG.
Avaya was coming out of BK in 2017 and is now heading back in!
Hundreds of vendors have entered the channel.
Most are still struggling to get traction and make sales. Why? The vendors don’t know how to sell-through or have the basics down (Value Prop, Target, Partner Profile). So they throw stuff at the wall and hope something sticks.
In 2017: “We could talk about cloud services and security, but those are NOT a large chunk of what the channel sells. Even The leader in channel sales enablement of next-generation IT technologies mainly sells connectivity.” A ton of network is still being sold but for not a lot of dollars. Cripes! 1GB pipes in a data center are $500. So yeah network is still selling but partners have to sell a metric ton of it to make a living.
SD-WAN was supposed to be the next big thing in 2017. Now everyone has it – just like UCaaS. It almost commoditized — but it is the basis for a secure network. Again, it is a hamburger. More providers need to spice up that burger.
The MSP vendors are still in a constant state of M&A and re-branding especially on the security sector.
Revenues were declining as were commissions in 2017. That is still happening, but partners are selling other stuff. I wrote this on LinkedIn in response to TSBs talking about how network isn’t a significant sales make-up.
One point that keeps getting made is that 5-7 years ago, most of the revenue in brokerages was network/Internet, but today that number is smaller because partners now sell other stuff. That isn’t because of the M&A or the new fangled thing-a-ma-jig at the brokers, it is because network prices have dropped. Ask Verizon, AT&T and Lumen about the wireline business’ 7-9% decline per annum. In addition, broadband sales in the channel increased (which is tiny ARPU). whereas before it was T1 based sales.
Moreover, adjust for the pandemic which gave UCaaS a push; ransomware exploding; contact center getting cheaper and the need expanding. All of this factors into why the mix at brokerages isn’t 80/20 networking/other. CyberSec deals are huge ARPU. It takes lots of network sales to offset one of those deals.
During this period, vendors adapted to co-selling to help close business – business no one would have won otherwise. ALL of this happened before and during the current M&A swing. You can take a bow for it, but there were many factors that contributed to where we stand now.
The channel sales numbers are increasing. That still won’t pay back the $700M in investment money that the brokerages took on.”
In 2017, Microsoft hadn’t quite figured it out, but now they control 290M desktops with Teams out of about 400M. Webex is somewhere around 6M. No one saw Zoom coming. And still no one pays attention to Workplace by FB which landed McDonald’s and its 1M employees!
No one went vertical.
GTT went bankrupt.
We have millions of open jobs. Millions who gave up W2 jobs to freelance and Uber/Dash/Cart. The pandemic burned people out — and made people less nice to be around. For real, people got weird during the pandemic and they haven’t figured out how to play nice with the world they exist in.
There wasn’t any big TSB M&A in 2017 but now there are 3 giants and not much else. TBI is said to be ready to go to one of the bidders – Scansource, Avant (unlikely), Telarus and AppSmart. I think Scansource needs the win here more than any other. I think AppSmart has left the master agency building.
The M&A in the channel has disrupted everything. And it will continue to for about 20 more months. Then there will be some big seismic shifts.
Once the TSBs buy up all the selling partners, where does the growth come from?
Vendors ask me all the time where do we go for more sales? I have no idea because all the avenues are slowing down.
Looking back on 2017, a lot changed. Some stuff I guessed right; some I didn’t.