Market consolidation, to participate or not to participate?
That’s the big question on the minds of a large number of independent MSP right now. A question that only you, as the owner of an independent MSP, can answer. Your choice is entirely dependent on your personal ambitions and convictions. The meaning you want to create with your company and its services. Want to know more about this? Read our article, Make Meaning – what meaning do you have?
But this is entirely from your point of view. What are the strengths and weaknesses of independent existence? And what opportunities and threats in the market affect such a choice. By looking at the market and your own business in this way, it can be easier to make the right choice for you. And you can decide whether you want to be part of parties such as Arcus IT, Broad Horizon, hallo, Interstellar, Sentia, Team.Blue, Techone, TWS, or continue on your own way.
Market consolidation creates a small group of parties that determine much of the direction of the market. Want to know more about this? Read our article: The MSP market is consolidating, next steps? These types of large parties will claim a position in the market primarily through branding and brand perception. Whereby this will mainly be aimed at appealing to a large part of the market.
For the independent parties, the big advantage is their manoeuvrability. This allows you to better adapt to the specific changing needs of a specific target group. By choosing to specialize in services, target group, region, technology or a combination of these, you can create an advantageous position as an independent party.
And by choosing a specialization, you should not stop at your sales and marketing and develop your portfolio and technology in a more specialized way. For example, as smaller and mid-sized MSPs, you can position yourself as an industry specialist—the challenger of the larger providers in that specific market. Here you can use a very targeted commercial approach.
The consolidation will give the new major parties a strong position with the suppliers. This will primarily provide a large financial benefit to the consolidated parties. This advantage will be used in two ways, namely as an additional profit margin for the shareholders. But also as a competitive means to lower the selling price in the market. And thus increase market share.
As an independent party, it is currently almost impossible to compete on price with the large parties. As described above, the consolidated parties are using the financial advantage to improve their competitive position. Currently, as an independent party, you will have to provide a premium service. That way, your customer remains willing to pay extra for the service.
Due to the current national consolidation and the migration abroad, there is an excellent chance that within 5 to 10 years, huge European players will emerge in the MSP market. These parties will serve the entire European market with their standardized services and products.
For small parties, the opportunity lies in the speed at which new technology is developing. Given the current development speed in the market, it is easier for smaller parties to assess these new technologies’ value. And create instant value for their customers. Smaller parties can better serve customers who want to make a difference themselves by deploying new technologies.
In the Cloud industry, the biggest threat is that new technology will make current solutions obsolete. In doing so, such a technology may be powered by the current vendors of the market, but it is also possible that it comes from currently completely unknown parties.
This threat applies to the entire market. Should this new technology being developed by the current vendors in the market, think Microsoft, Amazon, Dell, etc., the large consolidated parties will have an advantage. However, independent parties are closer to their customers. And thus the final market. Such new developments often come from unknown parties. Independent MSPs are more likely to be informed of such new developments because of their personal approach. This allows you, as an independent party, to turn a threat into an opportunity.