Micro-P has made significant changes to its business model with the aim of entering the mobile distribution industry, by acquiring Portix. The company distributes 3 and O2 airtime and has recently signed a deal with Acer to distribute smartphones.
Mobile: What is Micro-P’s history?
Woodman: Traditionally, we were an IT distributor. In 2009, we decided to start a new business, almost a separate company, that focused on IT with connectivity. We already have an established reseller
base of 7,500.
How did you break into the industry?
We acquired Portix a few years ago, and it is definitely aimed at the business level. The Portix sales team will start to promote contracts into the market place.
We have invested in Mark Rushton, who came from 20:20 to recruit resellers, and Ian Davis, due to start in August, will head up all of our business propositions.
We are recruiting a number of resellers and making sure they are competent and confident enough to engage in the process. We currently have 600 resellers for mobile broadband and we are aiming for 1,000. Business has been slower than we would like it to be, but it’s a 12-18 month project. This is not a quick fix, it is about taking down barriers, re-educating resellers and adding value.
Our biggest challenge is to ensure that we maximise on every opportunity. Micro-P made a conscious decision to invest in this area of the business, and has invested in the team to make sure it hits the ground running.
What makes Micro-P different from other distributors?
The IT channels were happily selling laptops a few years ago, but couldn’t react when telco companies started selling their products. We put a scheme in place that allows them to compete.
We looked at all the different propositions available and broke down the issues that resellers would face. We have generated our own web portal and taken out the risk by removing clawback and guaranteeing commission payments.
How else are you helping resellers?
A dedicated dealer portal will be set up from 1 September, which will give all the information they need. We are trying to offer ‘pick and mix’ solutions, there will also be a dedicated hot team that will hold resellers’ hands through the process.
We do the credit checks and dispatch the goods. Resellers don’t want to finance a free laptop and then wait 12-24 months to get their money back. Our option means they have no stock or finance risk.
How has Micro-P approached the mobile networks?
We are taking the ‘slowly, slowly’ approach and want to make sure we are up and running with the networks before we move on to others. 3 was our launch network and we also work very well with O2 – they are ultra aggressive and quick with new opportunities.
What are the advantages and disadvantages of convergence?
There are no disadvantages to convergence. The IT space understands networking, email and connectivity, and that knowledge will allow the end user to make a far more considered decision with converged products.
Convergence has been around for the last five years, but the question now is how to enable the channel to sell effectively, and it is also about recruiting resellers and re-educating.
Who is better placed to sell converged products?
It is a great new world for IT resellers, but we need to ensure they are happy and confident to move forward and then we will start looking at volume. Mobile resellers are better placed because they understand the products, but IT resellers have better relationships with their customers.
How will the industry evolve over the next 12 months?
As the laptop and embedded market starts to evolve, things could really take off for us. At the moment we ship 40,000 to 50,000 laptops per month and around 10% of them are embedded. In 12 months’ time, we could see as many as 30-40% of laptops with Sims embedded as standard.
The embedded piece will drive connectivity through the IT channel. As data usage goes up and prices come down, the premium on embedded products could fall as low as £15 to £20, whereas now it is around £60 to £80. It will only take one vendor to start selling at those prices and the market will take off.
The embedded market is the crossover between business and consumer – 70% of laptops are sold to consumers.