Download A brighter future for Europe`s IT channel

A brighter future for Europe’s IT channel
Alastair Edwards, Senior Analyst – Canalys
Presentation and channel panel
www.canalys.com/belgium
Username: heysel
Password: channel06
Available until: 30th June 2004
Expert analysis for the high-tech industry
Return to a fast-growth industry
Net revenue growth
12.2%
Canalys Titans Index
13.0%
8.0%
5.4%
Net income growth
2.2%
160.3%
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004
132.4%
66.2%
Share price growth
18.6%
-3.6%
28.9%
Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004
Year-on-year growth rates
31.1%
29.0%
21.3%
-6.6%
Q1 2003
Q2 2003 Q3 2003 Q4 2003 Q1 2004
Source: latest reported fiscal results for Cisco, Dell, EMC, HP, IBM,
Lexmark, Microsoft, Oracle, Sun
© canalys.com ltd.
Positive trend maintained
Western Europe
How well do you think your business has performed
compared with the same quarter one year ago?
Percentage of respondents
100%
Positive
90%
80%
70%
Flat
52
50
59
Negative
60
60%
76
80
14
11
10
9
Q4 2003
Q1 2004
50%
40%
30%
27
32
17
21
18
24
Q4 2002
Q1 2003
Q2 2003
20
20%
10%
20
0%
Q3 2003
Source: Canalys Channel Panels, Q4 2002 to Q1 2004 (85–129 respondents)
© canalys.com ltd.
Notebooks and security fuel the channel
Which of the following product categories
are selling above your expectations?
0%
10%
Percentage of respondents
30%
20%
40%
50%
Notebooks
Security
Intel servers
Desktops
Storage
Projectors
LCD TVs
Laser printers
AIO printers
Handhelds
WiFi networking
IP telephony
Linux servers
Inkjet printers
Wired networking
Tablets
Scanners
UNIX servers
Source: Canalys Channel Panel, March 2004 (45–94 respondents)
© canalys.com ltd.
Security is helping the channel grow
For the following categories, are sales above,
in line with or below expectations in Q1?
Percentage of respondents
100%
Below
expectations
90%
80%
In line with
expectations
70%
Above
expectations
60%
50%
40%
30%
20%
10%
0%
Security
Intel
servers
Storage
Linux
servers
UNIX
servers
Source: Canalys Channel Panel, March 2004 (86–94 respondents)
© canalys.com ltd.
Tablets are still a harder sell
For the following categories, are sales above,
in line with or below expectations in Q1?
Percentage of respondents
100%
Below
expectations
90%
In line with
expectations
80%
70%
Above
expectations
60%
50%
40%
30%
20%
10%
0%
Notebooks
Desktops
Handhelds
Tablets
Source: Canalys Channel Panel, March 2004 (68–93 respondents)
© canalys.com ltd.
Wireless is just ahead
For the following categories, are sales above,
in line with or below expectations in Q1?
Percentage of respondents
100%
Below
expectations
90%
80%
In line with
expectations
70%
Above
expectations
60%
50%
40%
30%
20%
10%
0%
WiFi networking
IP telephony
Wired networking
hardware
Source: Canalys Channel Panel, March 2004 (45–80 respondents)
© canalys.com ltd.
The message to resellers is clear
We are back in a growth market!
Failure to act will see opportunities pass you by!
Investment priorities
Business priorities
Security
Wireless
Mobility
Expertise
Headcount
Mid-market sweetspot
Applications/solutions
Compensation structures
Expansion
First with new technology
Non-traditional markets
Aggressive not cautious
Retain key staff
Move fast
Primary customer contact
Stay ahead of vendors
Upselling (options)
Market coverage
© canalys.com ltd.
Resellers – invest in people or systems
Volumes and revenue
High
Reduced, or no,
technical competence
Systems
Medium
Web tools,
procurement,
warehouse,
multi-vendor
Reduced, or no,
business dependency
on hardware
Partnerships
People
Training, accreditation, vendor
and industry specialisation
Low
Low
Medium
Contribution and margin
High
© canalys.com ltd.
Enterprise selling models to converge
Global
Multi-national
Government
Enterprise
Mid-market
Collaboration
Direct
Corporate reseller
Dell
HP
Channel coercion
Channel consensual
© canalys.com ltd.
Direct model success is over-hyped
100% direct
EMEA 2003 revenue by
channel 2003, 2004 trend
SMB
Enterprise
=
=
Storage
=
Networking
Notebook
Server
Networking
Storage
Notebook
Server
Desktop
Desktop
=
=
=
=
100% indirect
=
© canalys.com ltd.
Many channels into the same customer
PC industry
Networking
Voice
Created by: Compaq, HP,
Novell, Microsoft
Created by: Cisco, Nortel
Created by: Avaya, Samsung,
Inter-Tel
Notable distributors:
Tech Data, Ingram
Notable distributors: Azlan,
Westcon, Algol
Notable distributors: Rocom,
Nimans, MTV Telecom
Notable corporate resellers:
Computacenter, Dolmen,
Econocom, Systemat
Notable resellers:
Dimension Data, Getronics
Notable resellers: Omnetica,
Damovo, NextiraOne
But often different buying point
Corporate
Medium
Small
Micro
© canalys.com ltd.
Defining value-added distribution
Vendor
inefficiency
Marketing
New
technologies
High-value
Pre-sales
Technical
Post-sales
inventory
assistance
integration
support
Partner
Reseller
Customer
management recruitment acquisition
Duplication of vendor and/or reseller responsibilities?
Will role change during transition to industry standard computing?
Will customers pay for value-add?
Storage already requires more value-add than most servers
Other new, complex, enterprise technologies will emerge
© canalys.com ltd.
Migrating channel relationships
Channel conflict
Migration points
Channel co-operation
• Intense direct/indirect
competition
• Resellers still too
hardware-centric
• Vendors oversubsidising the
channel
• No vendor profit in
channel desktops
• Duplication of
channel/vendor role
• Corporate resellers poor
at SMB attack
• Slow technology
adoption
Reduced product
margin for resellers
• Reseller channel less
dependent on hardware
• Collaboration on
enterprise accounts
• Technology innovators
replace order takers
• Enhanced mid-market/
SMB attack
• Application centric: ISV
partnerships
• Service provider model:
hosting, remote
management, BPO
• Improved indirect
profitability for vendors
Outsourced accounts
Technology/solution
specialisation rewards
Focus on
profitable partners
Mid-market/
SMB incentives
Communication, clarity
and value recognition
© canalys.com ltd.
Resellers must choose the best route
Value: solution/servicefocused, technology
innovators: eg, in
security, mobility, IPT
VARs
Getronics
Dimension
Telindus
Data
T-Systems
Dolmen
Econocom
Computacenter
Online/mail order
RedCorp
Computerland
Alfashop
Value: cost-efficient
sales/marketing
platform, run-rate
volumes, low services
Value: account
management,
fulfilment, multi-vendor
accreditation
Shopmat
LDLC-PRO
Bechtle
DANGER AREA
Systemat
Large account resellers
© canalys.com ltd.
Franchises are an option for some
Can you imagine a business model where
resellers convert into franchises to become
“HP stores” or “Microsoft shops”?
“It works in B2C but not
really in B2B and is unlikely
to be successful”
18%
“It’s a risk if overly
dependent on one
vendor”
23%
“Resellers will migrate
to where they can make
the most money”
33%
“It’s worth considering
and an interesting idea”
26%
Source: Canalys Channel Panel, March 2004 (103 respondents)
© canalys.com ltd.
A sliding scale for resellers…
POSITIVES
Vendor
agnostic
Accreditations/
specialisations
Multi-vendor/
independent
Full vendor
franchise
Dedicated
sales teams
NEGATIVES
© canalys.com ltd.
…but the future of reseller channel looks
secure
Direct channel still inefficient
and unreliable in Europe
Reseller account management
role is recognised
Resellers maintain primary link to
mid-market and SMB customers
Technology innovation
never stops
Resellers are critical to fulfilling
growth in new technology spend
Vendors coming back to the
channel (HP, IBM, Sun)
Channel commitment brings
vendor benefits
Distributors strengthen reseller
channel (networks/alliances)
Vendors lack reach and
understanding of SMB market
Now is the time to invest:
skills/training, headcount, S&M
© canalys.com ltd.
Returning to the earlier message…
We are back in a growth market!
Failure to act will see opportunities pass you by!
Investment priorities
Business priorities
Security
Wireless
Mobility
Expertise
Headcount
Mid-market sweetspot
Applications/solutions
Compensation structures
Expansion
First with new technology
Non-traditional markets
Aggressive not cautious
Retain key staff
Move fast
Primary customer contact
Stay ahead of vendors
Upselling (options)
Market coverage
© canalys.com ltd.
A brighter future for Europe’s IT channel
Alastair Edwards, Senior Analyst – Canalys
Presentation and channel panel
www.canalys.com/belgium
Username: heysel
Password: channel06
Available until: 30th June 2004
Expert analysis for the high-tech industry