Qualcomm Inc (QCOM)

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Alcatel puts success down to channel push
By Daniel Thomas [17-05-2004]
Vendor achieves first profitable quarter in three years




Alcatel's channel shake-up has helped it achieve its first quarterly profit in three years.
The telecommunications vendor posted a profit of 134m euros for the first quarter of 2004. It said an overhaul of its reseller channel late last year, which saw the firm shed under-achieving partners, has led to a growth in sales of its IP telephony and Omni switch products.

The firm said it is now looking to grow the number of its reseller partners in a bid to push unified communications, converged networks and wireless in the local government, retail and financial services markets.

"We changed the way we were working in the channel in the latter part of last year and it's having a great effect," said Neal Tilley, Alcatel's northern European solutions marketing manager. "Our profits have been helped by great results from the channel."

Alcatel also saw encouraging growth in the mobile communications sector, with income growing to 70m euros in Q1, compared with 15m euros a year ago.

The firm said the double-digit percentage growth from 3G and mobile computing was also creating new opportunities in video communication, converged payment and messaging.

An increase in enterprises replacing telecommunications systems and switching with converged voice and data IP telephony has also fuelled Alcatel's profits, Tilley claimed.

Alcatel said it was also planning to steal a march on Cisco and Avaya by strongly targeting the government sector with its new wireless products.

"I can only see it getting stronger this year," Tilley said.

He added that Alcatel will also be offering more telemarketing, seminar and branding support to the channel to help maintain the upsurge in sales.

"The aim is to create a channel community based on quality and winning deals," Tilley said.

Pat Botting, managing director of voice and data reseller Freedom Communications, said Alcatel's changing attitude towards the channel, together with the quality of its products, was helping to improve sales.

"If you go back only three or four years up to 80 per cent of (Alcatel) sales were direct," said Botting. "The firm used to dictate to resellers but now it supports them well and has sorted its distribution out."

Botting added that he is also seeing a growth in wireless and voice over IP sales, particularly in the retail sector.

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