Mobility key to growth

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Portable and space-saving devices are tipped to stay strong over the coming year, with resellers increasingly reliant on consumers and telecommunications to drive profits.

Chris Herbert, managing director at business and technology analysis firm Inform, told CRN's IT Leaders Summit that channel success this year was likely to centre on themes of mobility and saving space, with continuing strong sales of notebooks, flat-panel displays, multifunction devices and PDAs.

Notebooks, flat-panel displays, multifunction devices and PDAs grew 50 percent, 268 percent, 191 percent and 60 percent respectively over the last year, though starting from a low base, he said.

“These key product areas show that mobility and space premium are the order of the day. These are key enablers of the market over the next 12 months,” Herbert said.

Boxed security-related items could also do well, he added.

However, Herbert said prices and pickings from traditional markets were likely to stay flat or even shrink as bread-and-butter SOHO and SMB business ranks thinned out in the next year.

Furthermore, enterprises would still have concerns about security and speed regarding mobile and wireless devices. This would mean resellers rely more on consumers to drive demand, he said.

Meanwhile, corporate and government refresh cycles had lengthened to four years. Consumer refresh cycles have shortened to two years, so there could be more hope for resellers targeting large government rather than private bodies, Herbert said.

He also said that convergence of IT with telecommunications would accelerate.

“We'll see traditional IT resellers making more partnerships with telcos, like eXeed with Hutchison. More telco products will move via the traditional IT channel over the next 12 months,” Herbert said.

He noted that notebook sales were still strong, but slowing to 48 percent this year and 32 percent next year while prices had dropped substantially.

“Twenty percent of all notebooks moving through the channel are now less than $2,000. Price gap by manufacturer is now less than $500, whereas 18 months ago it was more than $1,600,” he said. “It's not too late, but every month it becomes increasingly difficult to differentiate your product from that of your competitors.”

Herbert said flat panel screens, which had dropped from an average price of $1,700 18 months ago to $500-$800, now took around 40 percent of the monitor market. As TFT components proliferated, sales would accelerate.

He warned that the market had grown more sophisticated, with customers thinking more carefully about their buying decisions and knew more about IT.

“Technology no longer calls the shots. They will only purchase what they want, how they want and where they want. This is not going to change,” Herbert said.

He pointed out that resellers already trying to balance a product portfolio and offer “complete solutions” when some product lines were losing money would find it still more difficult to fulfill customer requirements this year.

“The largest growth will be coming from those with propensity to be either a high-volume or high-value player,” Herbert said.

Resellers needed to stay clear about which category they targeted – with those in the middle falling into a “bankruptcy gap”, he said. “And Inform has watched many companies fall through it in the last couple of years,” Herbert said.

Meanwhile, proliferating local computer fairs threatened reseller's chances to target high-use, savvy IT consumers such as hardcore gamers, he said.

“These markets offer a cheap and local outlet for local assemblers,” Herbert said.

As a result, further consolidation in the channel could be expected “every other week” although the market had stabilised since 2001, with 10 percent growth overall expected for the coming year, he said.

Despite the potential for shakeout, today's complex channel should work together to satisfy user needs, he said.

“No one organisation is likely to meet all its customers' requirements on its own. Today, success pivots on the strength of partnerships,” Herbert said.


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