The EMC Federation/Dell Inc. merger announcement should not drive channel partners into panic mode. But it should be an opportunity for partners to reassess and in some cases redesign their businesses in light of market trends, writes Wikibon Senior Analyst Stuart Miniman in “Transformation of the Storage Channel.”

Dell is known for its preference for direct sales over channel partners, particularly when selling to major enterprises. The EMC Federation, on the other hand, depends heavily on its channel partners for a significant share of its business, and the combined company will not want to disrupt those relationships.

This, however, does not mean that channel partners can afford to ignore larger market trends. About 70 of the channel is selling boxes. This market, Miniman writes, will continue to decline both in sales volumes and margins, under pressure from public cloud and open source.

Successful channel players are moving up the stack to sell higher value solutions such as VMware, SAP SE, Oracle, security or business intelligence. Partners also have an opportunity to expand into services in high-growth areas built on infrastructure-as-a-service (IaaS) such as modules built on Amazon Web Services (AWS) and Dell partner Microsoft Azure, that can be delivered through an API, Miniman writes.

Partners should expect the new Dell to provide more higher-value services and offerings from its combined channel. In particular, the Dell partnership with Azure plus EMC Federation members VMware Inc. and Virtustream Inc. provide opportunities for partners to deliver both sides of hybrid cloud solutions to their customers.

Copyright Wikibon 2015