B>Reinventing reseller terminology: "Doc, I'm confounded. I've looked at this slick, fat publication called Computer Reseller News. It's bigger than a New York City phone book. As far as I can tell, the magazine's raison d'tre is that people who occupy a thing called the 'channel' control the destiny of the gazillion-dollar computer industry. What is a channel? And what does the publication mean by using acronyms such as VAR, VAD and SI?"
--Conflicted between a channel and a hard place
Be forewarned: The channel is indeed a unique thing. So for want of a more precise metaphor, think of it, delicately, as a digestive tract. It's like this. Technology begins as research and development and eventually gets processed by engineers into 'product' -- hardware and software. Once released from the manufacturer, the product goes to distributors. From here it wends its way to VARs (value-added resellers), VADs (value-added distributors), and SIs (systems integrators). The latter three add custom programming, bundle software, promise training, set up help desks and so forth, before passing it to the bottom layer of the channel - a monetary-exchange device called the 'end user' or customer.
Here, for reasons perhaps of taste, the digestive metaphor breaks down. Instead of nutrients being separated from waste, the two are actually combined in ever greater quantities. Prices go up with every digestive step, as value gets relentlessly added and systems are more seamlessly integrated. Voila! Turn-key product -- a system that is billed as working -- emerges.
Note: channel people use the word 'source' as a transitive verb. So a channel insider might be overheard saying something like, "Joe's Best Value Discounts sources product from Big Bob's Excellent Distributors." Product is always used in the collective singular.
Conventional marketing wisdom holds that manufacturers must market to every link in this complicated, sloshing food chain. So it's not enough for, say, a Hewlett-Packard to market its wares to customers; the company must also market its gear to the distributors, VARs, VADs, and SIs. Computer Reseller News, like a peregrine in a pigeon roost, gathers the ad dollars that result.
Be cautious, however, as the shaky acronymic pillars of the channel are ever in need of shoring. For instance, "VAD" stands for a "value-added dealer." Many channel hangers-on imagine VARs are resellers who work from offices or who may have showrooms. Unbelievable. To these people, a VAR would not work from a storefront operation, while a VAD is a storefront reseller who provides value-added services, such as consulting, installation, repair work and training. Fortunately, VAD is not a commonly used term; most people in the computer industry consider the term "VAR" to be quite enough.
Still, one can understand why channel people, including circulation and marketing personnel for trade publications, would want to coin the term "VAD" to try to better define an amorphous reseller community. The Doctor considers such acronymic mixing the channel equivalent of an unbalanced diet; dyspepsia results. VARs start acting like distributors. Distributors start buying up VADs. Manufacturers start integrating. Everyone becomes everything, making channel acronymic entities as nutritional and filling, end-user-wise, as a fat-free Jell-O pudding.
The acronym "OEM," which stands for "original equipment manufacturer" is equally subtle. An OEM makes a product, such as a hard drive or microprocessor chip, and sells that product to manufacturers who assemble systems. But sometimes things get backward and once again channel dyspepsia erupts. So when Intel launched its Intel Inside campaign, Compaq saw this move as a partial violation of channel digestive protocol; only the final integrator of OEM products should get to slap its name on the box.
While many companies claim to manufacture their own PCs, chances are the company is assembling PCs from parts that OEMs manufacture and supply. There are many OEMs in the Far East who supply American manufacturers with parts. They are the channel's Chinese food -- cheap, addictive, often containing suspicious content, and only momentarily filling.
Got any tips on how to avoid channel indigestion? Send those and other acronymic zakooski to email@example.com