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VoIP Provides Recurring Revenue Opportunities for Dealers
Although you might be tempted to go for the pure hardware play, VoIP isn't really a hardware business. The real money is in locking up monthly fees.
Integrators considering a move into IP telephony, otherwise known as Voice over Internet Protocol (VoIP), may be tempted to go after the pure hardware play, as residential and commercial clients switch out their phones to IP models and exchange their legacy PBXes for IP versions.
But doing so could represent a missed opportunity.
Integrators in the VoIP market do agree that there's a good revenue stream in IP hardware such as phones, IP PBXes, and peripherals such as Quality of Service (QoS) cards and Power over Ethernet (PoE) technology. However, that's just the beginning.
"If you're selling Cisco CallManager, your client also needs to buy data access and a calling plan," says John Marcario, president of Savatar, a strategy and technology consultancy in Boston.
"[Clients] are not just buying a PBX, they're buying the voice and data infrastructure. If I'm a VAR [value-added reseller] and I'm just selling a PBX, I just left a whole lot of money sitting on the table."
"The hardware is a nice sale with decent margin, but it's a one-time thing," agrees Adam L. Eiseman, president and CEO of Lloyd Group, an IT integrator in New York City that offers hosted IP services with M5 Networks.
"[VoIP] is not really a product business -- the real money for us is maintaining long-term relationships and locking up monthly fees. I don't think anybody except maybe a large Cisco gold partner is in the VoIP market for the hardware angle."
For integrators, it may be a market worth exploring. According to the research firm Telecom Intelligence Group, the U.S. revenue for converged communications (IP hardware, applications, and services) in the SMB (small to medium-sized business) market will rocket from $2.9 billion in 2006 to $5.4 billion in 2008.
Those numbers reflect partners' real-world experience.
"In the past, we haven't had a lot of demand from people, but that's starting to change significantly," says Nick Pegley, vice president of marketing for All Covered Inc., an IT solutions provider in Redwood City, Calif.
"I think VoIP is becoming more of a mainstream technology."
Moreover, commercial clients increasingly view the VAR integrators as a viable source for VoIP technology.
Savatar's research from a recent survey on VoIP for the SMB market shows that 51 percent had purchased their systems from VARs.
Although VoIP is a promising market, it's not without challenges. For one thing, VARs should expect to prospect. "It's a demand-creation market," says Marcario.
"Our research shows that SMBs will buy VoIP if the economics are right, but if a VAR gets into the game thinking that that all they need to do is sign up with somebody to resell a product and expect customers knocking on the door, wrong. If you want to generate demand, you need to actively go out and create it."
This means that VARS must look for vendors that are willing to put time and effort into priming the pump with lead-generation help.
But doing so could represent a missed opportunity.
Integrators in the VoIP market do agree that there's a good revenue stream in IP hardware such as phones, IP PBXes, and peripherals such as Quality of Service (QoS) cards and Power over Ethernet (PoE) technology. However, that's just the beginning.
"If you're selling Cisco CallManager, your client also needs to buy data access and a calling plan," says John Marcario, president of Savatar, a strategy and technology consultancy in Boston.
"[Clients] are not just buying a PBX, they're buying the voice and data infrastructure. If I'm a VAR [value-added reseller] and I'm just selling a PBX, I just left a whole lot of money sitting on the table."
"The hardware is a nice sale with decent margin, but it's a one-time thing," agrees Adam L. Eiseman, president and CEO of Lloyd Group, an IT integrator in New York City that offers hosted IP services with M5 Networks.
"[VoIP] is not really a product business -- the real money for us is maintaining long-term relationships and locking up monthly fees. I don't think anybody except maybe a large Cisco gold partner is in the VoIP market for the hardware angle."
For integrators, it may be a market worth exploring. According to the research firm Telecom Intelligence Group, the U.S. revenue for converged communications (IP hardware, applications, and services) in the SMB (small to medium-sized business) market will rocket from $2.9 billion in 2006 to $5.4 billion in 2008.
Those numbers reflect partners' real-world experience.
"In the past, we haven't had a lot of demand from people, but that's starting to change significantly," says Nick Pegley, vice president of marketing for All Covered Inc., an IT solutions provider in Redwood City, Calif.
"I think VoIP is becoming more of a mainstream technology."
Jumping In
Moreover, commercial clients increasingly view the VAR integrators as a viable source for VoIP technology.
Savatar's research from a recent survey on VoIP for the SMB market shows that 51 percent had purchased their systems from VARs.
Although VoIP is a promising market, it's not without challenges. For one thing, VARs should expect to prospect. "It's a demand-creation market," says Marcario.
"Our research shows that SMBs will buy VoIP if the economics are right, but if a VAR gets into the game thinking that that all they need to do is sign up with somebody to resell a product and expect customers knocking on the door, wrong. If you want to generate demand, you need to actively go out and create it."
This means that VARS must look for vendors that are willing to put time and effort into priming the pump with lead-generation help.
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