Star Verizon VAR Launches Connectivity OEM BusinessStar Verizon VAR Launches Connectivity OEM Business

Mobility reseller and services provider Connected Solutions Group (CSG) has added another nomenclature: original equipment manufacturer (OEM).

CSG and Chinese manufacturer GL-iNet have started a new company, Katalyst, as a joint venture. The companies had been partnering since 2023 to create CSG-branded routers certified on the Verizon network. The new Delaware-based company will build and market connectivity products to small businesses. Those products will certify with all Tier 1 carrier networks, according to the company. The arrangement allows CSG to expand its customer base and deepen the level of support it provides to clients, and allows GL-iNet to further its goals of expanding its presence in North America.

CSG CEO Michael Pittman said the original router CSG sold from GL-iNet "exploded" in sales.

CSG's Michael Pittmann

"It did well beyond our expectations. And we found through launching that product that they were a wonderful partner to work with," Pittman told Channel Futures.

GL-iNet president and CEO Jin Zhao echoed the same sentiments regarding CSG's marketing and sales capabilities.

“Our partners have proven to have a wealth of knowledge in what business customers expect in North America, and we have greatly enjoyed the team approach in catering to these needs,” Zhao said. “By aligning our quality products with their marketing vision and customer-first model, we are confident we can deliver something special.”

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The companies say they have an ultimate goal of creating a U.S. factory presence for Katalyst. Such a move would make Katalyst compliant with the Trade Agreements Act (TAA) and allow it to sell to federal customers, Pittman said. Factory development plans might commence as early as late 2025, according to a news release. Katalyst's products will initially focus on 5G and LTE fixed wireless routers, but Wi-Fi solutions and other IT hardware are on the product road map, according to the news release. In addition, Katalyst is currently adding "distribution partners."

Going OEM

Pittman said he hasn't heard of another VAR taking this OEM approach. He pointed to two advantages: affordability and service.

"If I sell a Cradlepoint router, that goes through this line of distribution where five or six people have to get paid. We're bringing in the product and going directly to the end user, which gives us a lot of margin. We make really good, simple-to-use products. So that gives us, I think, a little bit of an advantage over our competitors," Pittman said. "But No. 2, we can support it so well because it's our product. We know it in and out."

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Pittman clarified that CSG will still sell routers from its traditional vendor partners. The VAR is an elite reseller partner with Cradlepoint and will remain that, Pittman said. That's because CSG is targeting the "entry level" 5G fixed wireless router market, he said.

"The segment that we're going after is really the SMB market ... " Pittman said. "We want to sell Cradlepoint and Inseego and Digi and other vendors, because a lot of times on the higher-end solutions, we make more money at the end of the day than we than we do on our own product. But they're just two completely different segments. A Cradlepoint is on average a retail $1,200 device and has a lot of super enterprise-grade functionality that our router isn't going to have to some degree. If we can get the customer into top-of-the-line equipment, then that's what we want."

Developing New Business Models

CSG started working with GL-iNet in 2023 at a time when pandemic-era business boom was beginning to cool down.

"Everybody obviously needed some form of of remote connectivity. Students needed tablets and handsets, and work-from-home was such a huge thing," he said. "We've been trying to figure out how to get the next level of growth at CSG after the pandemic."

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He said CSG has been putting more focus on services to end users, from installation to post-sale support. And that has resulted in new revenue streams for the company, which had predominantly earned one-time referral credits from carriers.

"How you create value in a telecommunications company is in residual income. When we talk to private equity, our banks or anybody that's assessing our books, they're really curious about what percentage of our revenue is recurring," he said.

Pittman said CSG needed to invest in its services, including enterprise resource planning (ERP) and a network operations center (NOC). That meant adding people and technology.

"We can see the full landscape of a customer's connectivity, notify them when there are bandwidth challenges or outages and immediately dive in to correct any deficiencies that we see," he said.

Remaining an Exclusive Verizon Reseller

CSG, a member of Verizon's Mobility Co-sell program and an exclusive Verizon partner, will not participate in any co-selling or activation programs from other carriers. But as an OEM, its product is certified with carriers like AT&T, T-Mobile, UScellular, Rogers, Telus and Bell Canada. Other VARs will be able to sell Katalyst's products, Pittman said.

But CSG will keep its own resale activities limited to Verizon. Pittman said he feels confident in Verizon's commitment to its Mobility Co-Sell program.

"I think they've realized that it is the best channel program in wireless," he said. "If you compare to apples to apples against the other carriers' programs, I think that they have the best program."