ZyXel Puts Recurring Services Revenue In Play

That's one of several major priorities for ZyXel this year, said Steven Joe, the former D-Link CEO who became ZyXel's executive vice president, channel business, Americas, in May 2011. In a few months, ZyXel partners will have access to new services-oriented channel programs to help them capitalize on trends such as cloud-based management of mobile devices and wireless networks, Joe said.

"We've been working on it for about nine months now," Joe told CRN in a recent interview. "We'll be announcing, in the coming months, automated systems for things like licensing and service-level agreements, all tied to services [VARs] can offer to their customers."

Joe agreed that off-premise management capabilities for products such as wireless networking systems and IP cameras will continue to be embraced by small businesses, which don't have the money to invest in bulky on-premise equipment and management capabilities and would prefer to consume IT infrastructure management as a service.

ZyXel, for example, will bring to market an IP surveillance system that solution providers can manage from afar via a Web-based platform.

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ZyXel's current revenue split is about 65 percent business customers and 35 percent consumer customers. Joe said the company has received good feedback for its recently launched ZyXel Channel Incentive Program, which provides eligible ZyXel partners a reloadable American Express card through which they accumulate awards for their success selling ZyXel products. The Channel Incentive Program also provides partners an online portal for tracking their rewards accumulation and updates them on requirements for new promotions on a monthly, quarterly and yearly basis.

"We're always looking for new partners," Joe said. "ZyXel is looking for partners [with whom] we can develop our vision and be able to execute on that vision. We have to think out of the box -- hardware is a commodity and what we're providing can't just be a technical solution, it has to be profitable for the partner and provide added value for the customer."

Joe sees a rock-solid cloud services program as key to preserving ZyXel's advantage in SMB, where commodity products reign and competitors, from Cisco to D-Link to a glut of smaller, consumer-focused companies pushing upmarket into the business segment, abound.

"You have to do things that are different. These products, unless they're Apple, I suppose, don't have all that much differentiation in hardware," Joe said. "There's still a majority of this customer business that is a hardware play, but by adding a software and services model, we can increase the percentages for our partners and make this a benefit for them going forward."