You know you spend a lot of time explaining to customers the “thresholds of business”. What is “TOB”? Generally, most companies (whether it be a hardware manufacturer or a cellular carrier) have a minimum threshold of volume to allow for customers to obtain a direct relationship, and to bypass the channel/distribution. For hardware manufacturers, it may be a certain number of units bought and for some carrier services, it may be that they have to commit to a certain volume/dollar amount before they can deal directly. I am pretty sure that they exist universally in all industries, but customers in the M2M space seem to enjoy eschewing those TOB in favor of direct relationships with vendors more than most.
It doesn't matter what part of the supply chain you choose, there will be thresholds. Want to deal with a carrier on subscriptions? ... You will need to agree to minimum numbers and amounts of billing. Want to deal with a manufacturer? ... Same thing, you will face rigid delivery schedules and purchase minimums in order to do so.
Why do these thresholds exist? It's really about bandwidth in our industry. OEMs and carriers do not have enough staff or time to help every customer directly (at least for some programs) and they have metrics that guide their sales teams towards those ends (namely....support big opportunities directly and filter smaller opportunities to the channel).
Incredibly, not every bit of subscription service is profitable particularly when there is pre or post sales support required... which there almost always is. Support is the main driver of all the thresholds in our industry. It isn't so much that the overall quantity is low, but more that the amount of support required to get the product to market may not justify the use of expensive resources at the OEM/Carrier.
Not many folks think about support when they approach the supply chain. Usually customers say, “I want to build 10,000 units. What is my price?” They can be astounded that they are sent to specialists in distribution to handle their support; to assist with financial requirements and offer logistic support and that the company does not choose to deal directly with them. In the distribution model, these three issues keep the wheels of progress moving because distribution usually provides these services to companies for virtually the same cost to the customer but a greatly reduced cost to the OEM or carrier.
With the move towards lowering down costs, OEM/Carriers are likely to increase this trend going forward. Customers who deal with distributors (especially good ones) are starting to see the overall value that they provide, and not just the purchase price.