Hidden gems in ADTRAN channel messaging – as well as lump of coal for Canada

ADTRAN’s messaging for its VAR and MSP partners at its Connect Press and Analyst event has been clear, and focused on the need to take advantage of developing OPEX opportunities. A couple critically important themes were not emphasized, however.

Meggin Sawyer ADTRAN

Meggin Sawyer, VP Business Solutions and Cloud Services at ADTRAN

HUNTSVILLE ALA – ADTRAN’s VAR and MSP channels, and their markets, were not the main focus of the company’s Connect event for press and analysts here today. The focus was very much on the significant initiatives the company is making in the carrier market, particularly its new Mosaic cloud platform, which was announced in late July. The message for partners was, however clear and consistent. The OPEX model offers significant opportunities, and partners should supplement their existing practices by moving into that, particularly through the ProCloud Subscription Services.

There are however, two significant riders to that strategy. One of them, the relevance of the carrier-centred Mosaic platform to ProCloud, is immensely positive. For Canadian partners, the other is immensely negative. ProCloud Services are not yet available in Canada, and likely won’t be until next year at the earliest.

“The messages from this event for the channel is that ADTRAN is changing to support the needs for end users and building to support the needs of MSPs so they can make money,” Meggin Sawyer, VP Business Solutions and Cloud Services at ADTRAN told ChannelBuzz.

Sawyer – an 18-year ADTRAN veteran has been in this role for a year – has broader responsibilities than did Ted Cole, her predecessor in the role. She emphasized that partners need to look at OPEX solutions that respond to changing demands in the market

“It’s what’s happening in the channel that’s causing the channel to change,” she said. “Customers are undergoing a transformation. People are looking to put resources into a growing business, not big capital expenditures. We need to build tools to help business with their OPEX and take them to the next step with all the other applications they want to run on top of them.”

Sawyer said that the shift to OPEX really has nothing to do with the products themselves.

“We had the products already,” she said. “It’s not about the technology. It’s about how we best help a business be more successful. With the launch of all these gigabit communities and the pressure on the carriers to bring that to the marketplace, it’s a perfect time for partners to upgrade to the OPEX model.”

While ADTRAN’s seminal programmatic initiative here, ProCloud Subscription Services, are only two months old, the messaging has been stressed for longer than that.

“We have been doing this with partners for 10 months,” Sawyer said. “We want to provide customers with network-as-a-utility that they would pay for once a month. For the partners, the value proposition is that it provides them with a more stable cash flow. They also have higher margins, especially when they start bundling things, and adding their own solutions on top.”

“This has been extremely well received in the field,” said Scott Stewart, director of ProCloud services and solutions at ADTRAN, whose role has involved extensive meetings with partners about the services. “Margins on monthly contracts are larger from the beginning.”

While the sub-50 set market is designed as the sweet spot, the Subscription Services play more broadly than that.

“The sub-50 market has been the strongest, but we have tried to price it affordable enough for small business that if the partner wanted to go upmarket for an enterprise they could stack it and sell into that market too,” Stewart said

Keith Fletcher, Chief Operating Officer of Savannah GA-based Speros, who is ADTRAN’s first master distributor for the service, said that their own customer base for it so far has been a little higher up.

“We’ve got large enterprises, but the biggest part of the market is in the medium part of the SMB,” he said. “They want the high quality switches, but they don’t want to spend a large amount of capital on switches. They want price and quality, and with this kind of a product, we can do that. You are getting enterprise quality. You aren’t getting Best Buy quality. There’s a huge difference.

“The small market is definitely there,” Fletcher added. “It’s not our core market. We do have some of that but not a ton.”

While ADTRAN is strongly pushing the cloud message to partners, they acknowledge that many aren’t interested, and the company doesn’t plan to push them.

“We have a giant customer base of VARs today, and the vast majority are still ‘buy and resell,” Sawyer said. “The vast majority of them don’t want to change. Their owners are getting ready for retirement. They don’t have the cash flow. Or they simply don’t like the cloud. We have a partner program today around buy and resell, and we don’t plan to change it. Buy and resell will never go away completely, no matter how much the overall market changes. So we have added the MSP program on top of our regular channel program.”

ADTRAN is also announcing the expansion of the ProCloud services available.

“What has been available up to now is switches, Gigabit switches and Gigabit APs,” Sawyer said. “Now we are adding, Gigabit routers, IP business gateways and Session Border Controllers.”

While neither is being stressed in ADTRAN’s messaging to the channel, there are a couple of important subthemes here.

The first is around the Mosaic platform, ADTRAN’s new cloud platform, based on an open services architecture, which was announced in late July. It is being positioned squarely at the carrier market. But – and this is a big but – the plan is to broaden it out downmarket in fairly short order.

“Mosaic to us is an open system, rather like Apple Health,” Sawyer told ChannelBuzz. “Today, it’s being built around carrier applications. That’s because the carriers are doing their broadband buildout and they need this fast. So that’s why we went to that market first with Mosaic.

“Mosaic, however, is really an open system,” Sawyer stressed. “We expect we will be able to offer the platform’s benefits in all the solutions we offer around ProCloud – maybe not this year, but soon after. Today we are pitching it at carriers, but over time, we expect it to be relevant to the MSP market.”

For Canada – and for that matter, all markets outside the U.S – there is a slight complication, however. For the moment, which is likely to last for a while, the ProCloud Subscription Services are only available in the U.S.

“My priority right now is to get them up and running and successful in the U.S.,” Sawyer said. “With any rental model, there is always an operational back end, and we want to work out all the kinks. We will move it to Canada after that.”

The Canadian market could use the impetus the new services will likely provide.

“Our channel business in Canada has been between flat and a bit of growth,” Sawyer said. “We have a team up there that calls on both the partner channel and the carrier channel.”