Techaisle Blog

Techaisle believes that in about 5 year’s time, SMB Cloud Computing will begin its steady route of complexity of client-server technology. Client-server technology (alternatively server-based computing) became increasingly complex to implement and maintain because of the following reasons:

• Lack of control


• Complexity in development and usage


• Muddled TCO


• Intricacies in Data Integration


• Expensive implementation


• Dependency on Consultants


• Too many Vendors providing niche solutions

Historically, these are the very reasons that  gave rise to thin-client computing which quickly transformed its nomenclature to Desktop Virtualization. Again the promise of lower TCO, “access anytime, anywhere”, centralized computing with de-centralized user capabilities, disaster recovery and standardization is still struggling to make a definitive statement for SMBs.

Similar signs are already becoming visible in the Cloud Computing arena. The beneficiaries of this complexity will be three different types of entities:

1. Those that provide consulting to SMBs prior to Cloud Computing Implementation


2. Those that provide consulting and data integration across clouds post cloud implementation for SMBs


3. Those that have a stack of offerings providing not only cloud solutions but also seamless data exchange capabilities for SMBs

Anurag Agrawal
Techaisle

It should come as no surprise that marketing to SMBs is hard – harder in many ways than marketing to enterprises. The diversity and vast size of the SMB market is the primary reason for why getting and supporting SMB customers is such a hard task. Most Cloud vendors design their products with larger enterprises in mind with SMBs being an afterthought. Even if there are any SMB specific requirements that become part of the solution they are typically overshadowed by other enterprise requirements. This is a particular problem with Cloud based services which are designed to scale and so selling those to SMBs becomes a matter of configuring a price that SMBs can digest.

Little if any thought is given to whether a Cloud service has direct business relevance to SMBs. But as the Techaisle SMB computing survey data shows, vendors must demonstrate direct business relevance if they are to succeed in gaining SMB customers. Despite all the marketing around productivity and line of business Cloud services, SMB Cloud adoption is led by industry specific services. This aspect provides valuable insight into SMB decision making where Cloud services are concerned. When evaluating packaged software SMBs are more concerned with issues surrounding application compatibility, maintenance, cost, integration, training and support. It would appear, however, that this criteria changes when applications are evaluated as Cloud services. The key question appears to be how quickly can a Cloud service impact their business. This makes justifying purchase of industry specific services rather an easy one.

It is clearly not the only criteria though. The same survey shows high levels of adoption of hosted email, Cloud storage and security services. While all these have indirect business relevance in that they are foundational IT services, they are essentially a cost line item in an SMB income statement. SMBs are migrating these services to the Cloud because it is also an easy decision. SMBs are familiar with using email in the Cloud for personal reasons (Gmail, Hotmail etc.) and are therefore comfortable migrating the business email and storage to the Cloud as well. Similarly, migrating to Cloud based storage and security also are easy decisions for the same reasons.

Other services however, have not enjoyed the same success (yet). One can argue that this is simply a matter of giving SMBs time to get comfy with Cloud services. The problem as we see it is that most of the other services are marketed using a “reduce cost” value proposition. We believe a different sales and marketing approach is warranted. If reducing cost continues to be the centerpiece then for vendors this becomes a race to the bottom – which is not good for the industry as a whole.

Abhijeet Rane
Techaisle

Recently we conducted a survey of small businesses to understand the adoption and cannibalization of traditional PC market by iPads and thereby Tablet PCs. Keeping aside the survey results for another time, a different blog and a report – our analysts came up with a lively discussion and two opposing views.

The debate started with the topic of Versatility: Multi role of PCs VS single role of Tablet PCs. However, Tablets are gaining docking stations and full keyboards and other aspects such as cameras will find their way in as a result of natural evolution of tablets.

For PC Cannibalization View

What will drive Tablets is the following:

• Longer battery life


• Shift to web based apps (no client download requirements)


• Cost in terms of power consumption


• Windows for Tablets


• Decreasing cost of flash storage

What will hold Tablets back:

• Manageability, tracking


• Corporate level security

Cannibalization should be discussed and thought of within the context of time. It will be significant in about 3-5 years. What it won’t cannibalize is the smart phone market. The problem this is going to cause is what do we call a notebook and what do we call a tablet. Apple has already announced that their notebooks going forward will resemble the new Macbook Air which will have access to the newly announced Mac AppStore and have access to the same apps that are available for iOS. Windows on ARM also means that previously Tablet specific apps will be available on traditional notebook form factors.

What we are seeing now is true convergence with the devices providing different user experiences depending upon whether they are used in a mobile context or not. One area where I do not see tablets replacing PCs is in software development.

Counter View

If Tablet PCs are given a keyboard, they then start to function like a notebook. If we look ahead, Cisco Cius, Apple iPad, Samsung Galaxy Tab, Avaya are not your traditional PC vendors. But more and more vendors are entering the fray and there is no stopping here. The degree of PC cannibalization will be driven by the strengths and interests of the following:

1. Suppliers: some processor manufacturer will be interested to have the Tablet market grow


2. New Entrants: data networking, phone companies, operators for 3/4G traffic utilization


3. Substitute: apps, cloud, input VS consumption


4. Customers: consumers appeal, businesses security

Cannibalization to some degree will take place and perhaps the functional substitution area is one we need to look at to determine probable size – i.e. what current functions done by PCs can be substituted by tablet PCs?

Tavishi Agrawal
Techaisle

With the ever growing uptake of smart and mobile computing devices, many IT and Telecom vendors have been quick to forecast major channel restructurings to take place. For example, for many vendors, Netbook PCs have opened entirely new avenues to consumers, increased the number of resellers in their rosters and even called for an entire reorganization of their affiliation programs.

Techaisle’s recently published survey of 2900 Small Businesses across four countries [US, UK, Brazil and Germany], however, shows that on average, less than 1 in 5 Small Business buyers are sourcing their telecom and IT equipment from the same supplier. The data has not changed significantly over the last few years, particularly if we consider the advent of IP-PBX switching and integration in data networks.

Price seems the determining factor – whilst about 1/3 of multi-sourcing SBs are not looking to consolidate purchasing practices, the research shows that the bulk majority is regularly looking at ways to unify sourcing.

The market is there but reaching it is proving to be difficult.

The same research shows that channel suppliers’ inability to price competitively individual products from both IT & Telecom worlds is the largest barrier for limiting convergence possibilities – and making SBs source each set of products from their most relevant price specialized channels. If we continue as is, we have a near perfect parallel world.



Business Buy Solutions… But also products! Get it right and a third of the market may be yours. That is the size of the buyers business which is being sought after at multi-degrees and multi-levels between shareholders, vendors and the very channel players supposed to converge.

It is not an issue about wanting to converge but the ever present need to grow that makes vendors seek to drive the IT-Telecom markets convergence and to do that, they must address this particular channel weakness – and this is not an easy task.  Invest, and others will benefit. Do nothing and nothing will happen.

Besides retail, each channel player [in their remit] is arguably looking at efficiencies, focus, expertise, and… price on a daily basis but one reseller focused on IP Telephony [and with many years of expertise in the solution] will undoubtedly struggle to reach sufficiently relevant economies of scale to price compete with a specialist counterpart in the IT world. And any investment to balance this equation will likely increase their cost structure to threaten the overall business. They will not be the first to change.

Retailers, on the other spectrum of the market, have been selling Smartphones, SIM handsets, PCs and Netbooks for many years now, but that is hardly convergence.

So it is up to the vendors to make it happen. I once read that the answer may lie in the development of program alliances - a scenario where vendor A and vendor B  define how their products fit into a solution for SBs and enable selected partners with the right approach, solutions and products [a program] to serve the market niche by niche and in a probable unified manner. Competitive dynamics may make it more like fantasy than a real proposition, but it is a nice vision of the future.

More probable drivers for channel convergence, however, are to be found in new integrated technologies or solutions [like cloud offerings billed to create a new breed of channel players] but for now there is just talk.

Paolo Puppoli
Techaisle