International Agents Section: Eyes to the East

Opportunities in Asia Grow for Partners

By: Tara Seals

[Excerpt from ChannelVision May – June 2016]

Asia-Pacific has long been known as a growth market for communications, but heading East has traditionally been easier said than done for channel partners. A mix of cultural differences, language barriers and a dearth of conduits to selling there has hamstrung U.S. partners from tapping the opportunities. That’s however starting to change, especially in the unified communications space, where companies are actively looking for U.S. channel partners to strengthen their cross-Pacific ties.

When it comes to what’s hot in Asia, there are two primary buckets of services that channel partners can offer their multinational clients: Data center/MPLS/IP VPN services; and unified communications. On the data center front, Technavio anticipates the data center market in the region to grow at an impressive CAGR of approximately 20 percent between now and 2020. Factors such as the growing adoption of cloud-based services, big data analytics and Internet-of-Things (IoT) will aid in the growth of this market, the firm noted. Digitalization has enabled several organizations to adopt cloud-based services for their businesses. By 2020, more than 50 percent of SMEs in the region are expected to operate their businesses by adopting cloud offerings from major communications service providers in the market. This growing preference for digitalization will spur the adoption of cloud-based services, which in turn will necessitate the utilization of data center services and high-speed connectivity.

Meanwhile, the unified communications market size is forecast to reach a healthy $96 billion by 2023, according to Global Market Insights. While the developed markets of the U.S. and Europe will continue witnessing steady demand, the market will largely be driven by Asia Pacific. The region’s market share is expected to reach more than 29 percent by 2023. Growing emphasis on cost cutting as well as demand for collaboration is expected to drive regional demand over the next seven years, according to GMI.

Steady proliferation of hosted products will be one of the key unified communications market trends, with more than $14 billion in revenue last year forecasted to grow to $49 billion by 2023. And GMI also noted that enterprises accounted for more than 60 percent of the UC market share in 2015. This can be primarily attributed to rising adoption of video conferencing and web-based collaboration. In other words, there’s a clear and growing opportunity for channel partners in the region.

Suppliers Help Partners Heading East

One of the suppliers looking to channel partners to help it grow in Asia is Telstra, whose acquisition of Pacnet has allowed it to tap the connections between the United States and China to support U.S.-based multinationals in that region, especially through Pacnet Business Services (PBS), which has been operating in China since 2008.

China is the fastest-growing emerging market in the world and offers vast prospects for expanding businesses. Over the past 25 years, China has experienced big changes. It has transformed from a market with a limited private sector into the manufacturing base of the world. This has opened the doors for vast opportunities for businesses across the nation in all major sectors including energy, technology, engineering, healthcare and finance.

“If your clients are not already doing business in China, they most certainly are considering how to – and there is opportunity for channel partners to support them on that journey,” the company noted.

Through PBS, Telstra offers IP VPN across 23 provinces, data center services in six cities and Internet services in 10. It has an established network of 25 points of presence in mainland China, located in 20 cities and covering major IT hubs.

Telstra’s partner program is based on in-region support to help channel partners navigate the complex nuances of Asia, with support personnel on the ground that understand the local markets, culture and complex local processes. California-based master agency Intelisys was one of the first to add Pacnet services to its Supplier Partner program. Intelisys sub-agents can sell Pacnet’s data center, MPLS, Ethernet private line, IP transit, dedicated Internet access and content delivery network services throughout the Asia-Pacific region, including China, Australia and India.

“The Asia-Pacific region has seen explosive growth over the past several years, and more and more US-based companies are either looking to expand their current operations in the region or create new operations – particularly in China and India,” said Cardi Prinzi, head of enterprise sales for the Americas for Telstra. “We have seen from experience that agents’ customers may be utilizing providers that do not extend services to Asia, so Pacnet can help them provide additional services for expansion and have a platform to address new opportunities.”

That’s a message that resonates as master agents move up-market to tap larger enterprises, many of whom are looking to expand globally. Jay Bradley, president of Intelisys, added, “Demand for international services continues to grow and [we have a] commitment to support our partners with customer opportunities in Asia.”

Telstra’s recent success with U.S. partners in China include a large data contract for an advertising customer that delivered a $20,700 monthly recurring commission to the channel partner; a manufacturing customer that needed an Ethernet private line between Taiwan, Shanghai and the U.S. (a $30,600 MRC); and a couple of global MPLS wins with a logistics customer and a software customer – resulting in $178,000 MRC and $27,000 MRC, respectively.

“We are helping partners to expand their conversations and drive new revenue streams within their existing account base through international,” said Jason Kitzmiller, vice president of channel sales. “My team is ready to help you do the same – we are your expert resource for doing business in Asia – and particularly in China.”

NTT Communications (NTT Com) has also set its sights on U.S. channel partners, especially given the dramatic growth in the UCaaS market in the AsiaPacific region. The company sees a key trend being businesses making the switch to IP communications in order to reduce their cost of international calls. This is particularly the case in industry verticals with highly mobile workforces such as in professional services, logistics, travel and hospitality, transportation, entertainment and retail sectors.

Last fall, NTT America said that its new Global Solutions Channel Partner Program had surpassed initial expectations by achieving 60 percent of the company’s total goal for secured channel partnerships ahead of schedule. So far, NTT America has signed nine master agents from all regions of the country, including Sandler Partners, PlanetOne Comunications, TBI, Presidio, WTG and others. It has a goal of reaching 15 total, all of which is aimed at signing enterprises and mid-market organizations looking to expand their operations globally.

“NTT Com’s global reputation and international service offerings were among the primary reasons that Sandler Partners became one of the first distribution partners to join NTT America’s Global Solution Channel Partner Program,” said Alan Sandler, founder and managing partner, Sandler Partners. “So far, the NTT America team has shown extraordinary flexibility and support in matching and engineering their services to client needs. We are looking forward to an ongoing successful partnership.”

Top 10 UC Trends in Asia-Pac

According to Frost & Sullivan, the UC industry in the Asia-Pacific region is nicely balanced, with newer fast-growing segments and older, consolidating sub-markets.

“We also expect service providers to form alliances or acquire companies, such as channel partners or small emerging solution vendors, to increase their reach and offering,” said Shailendra Soni, industry principal for ICT at Frost & Sullivan Asia-Pacific.

According to the report, the top 10 UC trends in Asia-Pacific through 2015 will be:

  1. UC on-premises market to migrate to UCaaS – UC on-premises customers, particularly large enterprises, will migrate to UCaaS at a fast pace. The flexibility of deployment from on-premises to hybrid to cloud will put UCaaS solutions ahead of UC on-premises solutions.
  2. Third-party vendors will play a pivotal role – As the UC industry is expected to move to the cloud, third-party vendors will increasingly provide solutions that enable integration and growth for the UCaaS market.
  3. UC R&D investment to decline – UC investment on R&D is expected to decrease, forcing UC vendors to pick and choose specific UC segments for R&D investment.
  4. Mid-market is a new green field – Vendors will strengthen their GTM for the mid-market leading to higher growth in this segment. Vendors’ focus will move from just recruiting to recruiting and sustaining channel partners.
  5. Video conferencing – Will continue to move from the conference rooms to desktops, and from hardware to software solution. WebRTC will see growth in the SMB and education sectors.
  6. Google’s ‘Apps for Work’ and Microsoft’s ‘Skype for Business’ will further disrupt the UC market – Microsoft will be more aggressive with Office 365 and Skype for Business, and increase its penetration in large and mid-sized enterprises. Google’s ‘Apps for Work’ has entered enterprises in Asia-Pacific, especially in the education sector and will break into mid-sized and small enterprises.
  7. Wearables will continue to enter the enterprise – Smartwatches might monitor employee activity, manage schedules and help to push notifications and communications to customers. Wearables are also expected to popularize the use of ‘speech to text’.
  8. Communications will continue to drift away from the desktop – Asia- Pacific is rapidly catching up with the trend of working from remote locations, from home, and while in transit. Many offices will migrate away from fixed desks, reducing the need for hard endpoints and boosting sales of softphones, and UC and mobile clients. As a result, IP phones and digital phone sales will decline.
  9. Headset sales to go up – Softphones, and UC and mobile clients will see accelerated adoption. In addition, ‘Skype for Business’ will create a strong business proposition for the enterprise headset market. As a result, market leaders, such as Plantronics and Jabra, will experience high growth in enterprise headset products. Wireless headsets will have faster growth than wired as employee usage moves from one device to many devices.
  10. Resurgence in hosted telephony market – Service providers will attack the hosted telephony market with new offerings and with new vigour, as telecommunications infrastructure across the Asia-Pacific region is expected to continue improving in the future. Enterprises will adopt hosted telephony as a part of UCaaS solutions, or as a part of their future roadmap in UCaaS adoption.



About ChannelVision Magazine:

ChannelVision is a bi-monthly digital and print magazine, read by channel partners selling all manner of voice, data, access, managed and business services (both on premise and “in the cloud”), as well as, technology, gear, and equipment.  ChannelVision is a highly focused and efficient way for service providers, hardware, and software companies to reach experienced channel partners targeting the small/medium business space.  Serving a controlled circulation of providers and indirect distributors of communications, network, IT and cloud-based business services, ChannelVision is telecom’s gateway to perspective on how to adapt, what to sell, and how to sell it.