The three -day conference from 4th to 6th of December 2018 at hotel Kerry, Hong Kong exuded the partner growth opportunity with the growth in technology.
The three-day conference of Canalys in the APAC region at Hotel Kerry, Harbor Front, Hong Kong once again proved to be a melting point for the APAC partners. It not only because a perfect cocktail of entertainment and information but also hub for networking of partners with their principals and their peers away from their home land.
The recipe of the event comprised more than 32 sessions including 6 keynote session from the organizer and the sponsor, 3 health and fitness sessions and 1 media round table session. There were more than 1000 visitors with 95% partners from the region and rest delegates from various principal companies and organizers.
“The born into cloud reseller model is nonsense because it is a multi – cloud world.”
President and CEO
The event informally started with a CrossFit session, which was basically for socializing and testing the skills of endurance. But the formal event started with the keynote of Steve Brazier, President and CEO of Canalys, said that the trends that are important to the industry including flash, wireless, hyper converged, software as a service, IOT censors, managed security and public cloud are all in extremely high growth. It is a hybrid multi-cloud world. Giving a reference, he quoted, “Jeff Bezos, CEO of Amazon, clearly articulated that it is a multi-cloud world. In fact, one day Amazon would fail ad it would go bankrupt. It means the clear message from the top boss is that – do not go 100% on AWS. You need to spread your stuff. If you go all in with one cloud, some nasty thing might happen. There might be hacking in the company, they might go bankrupt, there might be a political event that they may not be willing to serve in your country because they would blocked due to some regulatory things.
The edge computing market is growing very fast because data stays local. You are running a factory or retail or warehouse, you want to keep the data on the edge because of the performance issue. Therefore, AWS followed by Azure has brought out outpost, where they are not very clearly of the channel play.
The biggest challenge in your business is lack of skills. Doing security, software and cloud means you are doing complex things and you need clever computer scientists to help you. The salaries of those people are going up and up.
Another statement is that the PC industry is doing really well. Despite the talk of the town 4-5 years back that the PC industry would go away – replaced by the smart phones, it has not happened yet. The price of the PCs is going up and the segmentation of the product lines is going up. When the price is going up, the PC companies are making more money and the channel is making more money. Clearly the windows 10 refresh has been part of that.
Distributors in APAC excluding China have grown 8 % this year. Where as in china the distributors are growing 15%. The partners are doing event better as their average growth rate is 10%. Many of the partners are doing 20-30-40 per cent growth in India. Places like Australia, New Zealand, etc. markets are booming as the digital transformation is happening. Partners are winning in many key areas.
Country wise, security standards are evolving. Every county in the regions are adopting their own standard.
One area where the market is under performing is the crypto currencies. There were a lot of hype around block chain, but we are skeptical about how the Blockchain would be. Blockchain in reality is a shared spread sheet.
There is a typical development now around the conflict between the big SIs and the Channel partners in developed countries including Australia, New Zealand and US. We are going to see more and more overlap and competition from the big companies.
Other thing which is seen this year is the born into cloud reseller model is nonsense because it is a multi – cloud world. You need to give the customers a full experience for that you need to sell everything – not the public cloud only.
Steve emphasized, “Most of these partners are not making money. They would be acquired or merged, and that bubble would burst.”
The other thing that is seen today is that there are a lot of tension between the vendors and the partners.
The vendors would say, we want loyalty. The channel would say, you want us to be loyal but why are you selling direct. The vendor would say, we need growth. You would say we do not need growth thank you very much. The vendors would say all the tools and processes that they have created over last 12 months. Automation is good. But they cannot automate the channel programs and cannot take the people out because the people make the business. the vendors would try to sell you subscriptions and they are going to tell you that there are a lot of customer demands for the subscriptions we do not think that is the case. The shareholders love subscription because the more there is subscription the more is the value of the company. Therefore, Microsoft is the most valued company as they transitioned to the subscription model. Partners going on subscription mode means vendors access your customers data, which you do not want.
The world is becoming a difficult place. The big tech CEOs are having to make decision, which perhaps they never imaged they would because the world is becoming more nationalistic. It is a big issue for them.
Jordan De Leon, Senior Analyst, Canalys added, “One of the biggest challenges in todays business the US and China trade war. But good thing is that China and US would increase them invest in Asian countries. The biggest thing from China regardless of the trade ward is to scale up its manufacturing of semiconductors. Now china imports 200 US$ semiconductors from US. We expect them to decrease their alliance on that but increase their alliance with South Korea, Japan and Taiwan. This last quarter, China has increased their import of semiconductors from South Korea by 7.8 %. In the future we could very well have the exact copy of intel processors. Because of the trade war factories are moving out of China which is offering the partners opportunity to work on technologies like robotics, analytics IOT and edge computing. but the fact is that it is a time of uncertainty and you need to be prepared for that and wait for the opportunities.
Steve added: it is not the trade war and the politics of China and US, we also see a global supercomputing arms race – particularly, in three key subjects. One: who has got the biggest and the best performing cloud, who is going to be the first to 5G, and who is going to deliver Exascale computing. This is a race. Future battles may not be the physical wars but be cyber wars. And countries with the people and the most powerful computing are the ones who will win. There would also have knock-on effects in the areas like AI, Economy, healthcare.
China would first to the Exascale and South Korea would be first to the 5G leaving behind US by one year. That has really spooked the US that not only China is heading ahead in trade but also leading the tech innovation and adoption.
Some of the trends:
- Apple is selling more services than the smart phones.
- Apple is doing 9.5 billion business in services / quarter
- Amazon could not afford their CAPEX on the cloud – did not have enough cash flow and it was negative to drive 2.-3 billion business / quarter but all of a sudden they started selling ad in their website and suddenly they started reporting 2 billion dollar a quarter on ad sales.