Middle men and the cost of IT products

I’ve got a big beef with technology companies these days and it’s the involvement of more middle men so they can “grow the business”.  Back in the late 80’s (when I was a wee pup of a lad) Dell Computer Corporation dealt directly with businesses and consumers.  Dell direct!  “You’re getting a Dell dude” and guess what, it’s not from a middle man but right from Dell dude!  There were no middle men, it was great and what made Dell special among other tech companies doing the same thing like Gateway, HP, and IBM.  Dell innovated, was in the right place at the right time with the dawning of the Internet (known by many things now like “the world wide web” or “the InternetS” or perhaps, “the Interweb”).  The Internet helped Dell connect directly with their customers without the use of other distribution channels like resellers.  Newegg.com for example is the epitome of a middle man.  Thousands of products (including Dell computers sadly) by thousands of vendors.  Sure it works but it doesn’t work well for me with some specialized IT products like software or integrated hardware.  Newegg for me makes sense for parts but has certainly become more and Dell, well…they’ve gone backwards by expanding their distribution model that now includes middle men like Walmart.  Yuck!

You know what a middle man does?  It pushes the price up on many of the products and services we want to consume and shrinks the margins made by the manufacturer.  Manufacturers like Dell though try to make it up on “volume”.  Eventually though, as volumes decrease so do profits but I’m not sure they’ve realized this yet.  As of late my biggest beef is with VMWare.  More specifically, the Zimbra arm of the business know now as “VMWare Zimbra”.  VMWare acquired Zimbra a few years ago.  VMWare started growing quickly thanks in part to middle men.  At one point VMWare products were a good value for money but when the middle men like Dell, HP, IBM, etc started reselling their products the prices went up and so did sales.  They started selling more units thanks to their new distribution model, great for the short term.  I suppose that’s what happens when you’re selling army quadruples in size, you sell more!  I understand, VMWare had shareholders to please.  Thanks to middle men and other market variables like share price and profits the prices on VMWare products went up.  When prices go up, value for money goes down.

Sadly, VMWare is taking the Zimbra product in that direction.  Since I’ve started working with Zimbra, they’ve been sold, prices have gone up and now they push you to distributors, resellers and hosting companies.  It took me three weeks, several updated support tickets and patience to finally get a hold of a real honest to goodness, flesh and blood sales person.  After emailing their sales staff I explained that I wouldn’t need to speak with them if their online portal was more clear and had better explanations.  Apparently though I’m the only one in the world who was confused by their licensing model.  Another poke in the eye is, they shared my contact information with a reseller who then pesters you about your upcoming renewal.  So much for the privacy of my information :-)

Back to the irritating part of what VMWare is doing, they’re using middle men to distribute their product and grow the business.  What happens to you and me as a consumer of their product?  We pay more.  Sadly, I might have to advise people to go use Kerio Connect rather than Zimbra since you can deal directly with Kerio, they have one product line with all the bells and whistles for half the price of Zimbra once you purchase the product and go on maintenance.  Additionally, with Zimbra you have to buy 25 user blocks even if you just want to add one user thus wasting 24 licenses.  With Kerio you buy licenses in blocks of 5, I like that granular approach and direct model.

I like Kerio because it does everything Zimbra does and just as well.  You can even install it on an open source platform!  You can deal with them directly with no middle men, they have just one product that’s all inclusive AND they’re a great value for money!  I think I’ll be advising my clients in the future to dump Zimbra and migrate to Kerio hands down.

A small update!  A colleague of mine showed me another alternative to Exchange and Zimbra.  It looks promising and looks like a good value!  It’s called Zarafa.  I’ll update as I intend on using it.  The small business edition which lets you use a ton of features, mobile sync, Outlook (if you care to use Outlook…I don’t) and much more is only $80 dollars Euro for a 5 pack per year.  This looks promising!