The 2018 Canalys APAC Channels Forum keynote
The keynote at the 2018 Canalys APAC Channels Forum took place in Hong Kong on Wednesday, with insightfully balanced commentary and predictions from Canalys president and CEO Steve Brazier.
Straight away, Brazier gets into practical advice - “It is a multi-cloud world.”
He points to a moment a couple of years ago when Jeff Bezos stood up and predicted that Amazon will go bankrupt.
“Now, if that isn’t a clear message to give your customers that you do not want all your IT on one company(‘s platform),” he says.
“You need to spread your risk. If you go all-in on one cloud, nasty things might happen.”
Bankruptcy, hacking, system failures and political events are all outlined as examples.
In fact, the latter quickly becomes a recurring theme of the keynote as, you will notice as you read, the US/China trade-war and its effects on economies and markets shade Brazier’s commentary throughout.
Brazier discusses how the entire IT market has performed well, even in areas that were unexpected such as the PC market.
“Distributors have been particularly surprised by how strong the volume products are,” Brazier says.
“This has created margin challenges in some areas. All the volume products have been very, very strong, both consumer as well as in the enterprise.”
‘Surprise’ may be a strong word for many of those on the ground in the channel but for those in more strategic roles, this trend may cause plans to need reassessment.
Security is, of course, another major trend - there is little new to say here except that those who are selling into this area are going to continue to win.
Bitcoin and its related markets are dead except for “drug dealers and terrorists,” Brazier says.
“It was hype, it was a bubble. You shouldn’t be in the market. It has collapsed. It will not come back” - the message is pretty clear.
Even blockchain is treated sceptically by Brazier.
“It’s a shared spreadsheet, an Excel file. There’s a lot of hype but whether it really changes the world the way people hope, we really doubt. Most experiments are not going well.”
However, Brazier does note that there are now a lot of second-hand GPUs on the market - good news for consumers, maybe disruptive for the market.
Australia and New Zealand are pointed to specifically when the skills gap is mentioned.
This is not news for the local industry but hopefully, as the issue continues to grow in notoriety, this will mean that government and corporate action will continue to address this issue.
Vendor and partner tension is beginning to grow as vendors are stepping on the toes of resellers and integrators.
“Why are you selling direct when you want us to be loyal?” Brazier asks as a hypothetical partner.
“The vendors are saying we need growth - no we don’t, our growth is fine, thank you very much… Vendors will tell you there’s a lot of demand for subscriptions - we don’t really think that’s the case," however, Brazier notes, "Shareholders love subscriptions.”
Brazier does add that A/NZ is an exception to this rule but his advice that partners need to maintain a balance, not commit entirely one way or another to CapEx or OpEx is worth keeping in mind - especially if the price is sharing customer data.
“You don’t want vendors to get your customer data,” he says.
“I think one of the things you will be able to measure vendors on going forward is: do they tell you what data they are collecting on your customers?... Do you have full transparency? You should be insisting you know exactly what the vendor is doing with your customers’ data.”
Brazier now circles back to political pressures for vendor CEOs, commenting on the desire for most companies to want to maintain political neutrality, but how it will be increasingly difficult in the future political climate, when even Satya Nadella has had to publically criticise President Donald Trump
There is an odd moment when Brazier tries to highlight how the reality of corporate neutrality is “nonsense” this with an example.
“Because your position, for example, on LGBT rights - if you are in California, you are very liberal. it’s already normal. If you are in the Middle East or Russia, it’s certainly not normal.”
If I can take a moment to editorialise, I am fairly certain there are significantly better ways to describe the issues that LGBT people face on a global stage - but I suppose his point is taken.
Nationalism, global identity and maintaining culture are all named as potential concerns for a global business and Brazier then invites Canalys Asia Pacific channels senior analyst Jordan De Leon to the stage to elaborate on what the US/China trade-war means for the APAC region.
A/NZ is not mentioned much in De Leon’s commentary. However, it is worth noting that with the war comes increasing economic uncertainty, especially in mature markets, and that means opportunity for partners to help businesses prepare.
What is worth considering, however, is a comment that Brazier makes about China’s potential to overtake the US in three main categories - Best performing cloud, 5G and exascale computing.
“Future battles may not be physical wars, they will be cyber wars,” Brazier explains.
“The people and countries with the most advanced computing and power are the ones that will win. This will have knock-on effects in areas like AI, the economy, healthcare, positive things too.”
With the unique position of A/NZ as a part of APAC but with our particular place in the western world, there is no doubt that the future will be an interesting place for the A/NZ IT industry, and its citizens in general.
The buzz around robotic process automation (RPA) has been heating up significantly over the last six months or so, and Brazier spares no superlatives in describing the opportunity that “one of the most exciting trends for this year” can bring.
“This is a very high growth area. The market today is not yet $2 billion (US) globally, but it’s growing very, very fast,” he says.
“Robotic process automation will be a big hit. It is something you should be getting into by working with… older companies and telling them how they can transform their business.”
He points to applying for and approving bank loans as an example of where a slow, tick box exercise can be morphed into an automated process to provide users with “instant, or at least very rapid responses.”
But “what is the biggest success of the tech industry this year? “The single fastest-growing category?” Brazier asks.
"Smart speakers. Led by Amazon, Apple, and Google, but also in China with… Xiaomi etc.”
Brazier expands this trend to include ‘Voice’ in general, pointing out the frustrating irony of having to launch a smartphone app to use smart home features when a switch was much quicker - however, with voice activation, this is all going to change.
“Voice platforms are going to be a major competitive area. While they are mainly in smart speakers today, they are going to be seen in many places, not least cars.”
New job roles are guessed at, such as the 'Evaluator' who will look at why AI was successful or not and work out how to replicate or prevent that occurrence in the future.
AI trainers and AI training trainers, diversity officers, and ethical sourcing are other opportunities within the IT industry, while road traffic control for autonomous vehicles, health and fitness, and elderly care are also mentioned as other areas of career growth.
Finally, Brazier makes his five last predictions.
Prediction one looks at the Alibaba/Amazon battle for the direct to business market. “Alibaba will overtake and beat Amazon Business in South-East Asia by 2020. They will just move faster to this region. Amazon Business is only present today in Japan and India.”
Brazier also notes the challenges both of these companies will face around counterfeit goods (that Amazon has done little to mitigate on its own platform), which will impact these marketplaces and disrupt pricing.
Two of Brazier’s five final predictions look like bad news for Intel, on top of the fact that China is aiming to produce its own semi-conductors and perhaps even Intel clones for its own market.
“There’s a lot of innovation going on in processors,” Brazier says.
Prediction two is that “Apple has the performance, we think, to leave the Intel processor behind by 2020."
Prediction three is that “Intel is short of products this quarter..., AMD has the best set of products it’s had for many years and they are the first to move to 7nm. Remember (Intel’s) drone demos? Quite cool but a small market and it forgot to build up the capacity to run the PC business.”
Prediction four also relates to Alibaba, this time that Alibaba Cloud will become the third largest cloud provider in APJ excluding China in 2019 - again the US/China issue being a factor and another reason A/NZ partners need to be taking notice of the politics.
Prediction five is India overtaking the UK and France to become the fifth largest IT infrastructure market in the world because, as Brazier observes, it is “in a good position for not getting caught-up between the US and China”
Brazier’s final comment is a word of warning, a fitting end to this variously exciting and concerning keynote.
“Stock markets have come down, in China significantly, in the US significantly. Many tech companies are worth 20% less now than they were three months ago. The biggest driver of economic change is that the US has decided to end quantitative easing, which they have been doing since 2009 when the financial crisis happened.
“The amount of money in their economy is declining. The EU and Japan are continuing to provide quantitative easing but they are dropping the amount they are providing, next year that too may end.
“As a result of this… it seems to directly to have impacted share prices and people’s attitude to risk. It’s very hard to forecast the economy but… we expect the next 12 months for the economy to be much harder than the last 12 months. Some of you in high-growth countries may not feel it but you in mature countries will.”
A/NZ is traditionally one step apart from the goings on of the rest of the world, both high-growth and mature, never quite impacted as much as those firmly on either side.
However, it seems like the pace of change we have seen in the last five or so years is not about to ease up and may increase thanks to political tensions, globalisation, and a fundamental shift in how the world consumes IT as a whole.
What you do with this information is up to you but, as the old adage goes, forewarned is forearmed.