Reselling Cloud: Does it make sense?

I ran into a MSP member on the street today (literally) and we got to talking about the industry. After asking how things were going he steered the conversation towards the cloud and how certain vendors were pushing cloud services to be resold be MSPs as a product offering.

Being the inquisitive person I am I asked how much margin the MSP would be making off of this cloud service: 6 points was the reply. Now, I’m not rocket scientist but I figure the garden variety VAR can make 6 points without breaking a sweat. VARs, even those making this margin in the last decade, wanted more and began their transformation into MSPs in order to improve their lot in life. So, what gives?

Unless today’s MSPs are just glad to be making 6 points, there’s got to be something else to this. Being the student of human that I am and having been an observer of the IT channel for quite a long time, I figured that cloud (including Software as a Service) had become the new hardware. What I mean is that while VARs have pushed hardware and software in the IT channel for a long time, there are some vendors (and some resellers) that insist on bringing the same old relationship that used to exist in the hardware days into the managed services and cloud environment. More simply put, to some vendors, MSPs are just VARs by another name.

Now call me naive but I thought for the last 10 years the VAR community was making this huge transformation into IT services in order to improve margins, create better valuations for their company, and overall improve their corporate lifestyle. Maybe I was wrong.