Some Channel Trends Worth Watching ...

Will the credit crisis crunch the channel? Right now, it is not clear how today's SMB"focused VAR is going to be impacted, but many are feeling the pinch of banks or lenders pulling back. There may be some VARs who will be negatively impacted, and some cash-strapped firms will be forced to close. Those most affected will be ones with the least amount of diversification—who have not grown their services business or are too dependent on one customer or vendor.

Meanwhile, we are already seeing attempts by some organizations, such as Harrisburg, Pa.-based D&H Distributing, to make more credit available to small solution providers. Keep in mind that the debt levels of the major distributors have fallen to new lows, which should enable them to fund VAR projects or help VARs through this crisis.

Will innovation be stifled? If the IPO market dries up for a prolonged period, any company looking for venture capital will have to plan on a sale to a larger vendor vs. an IPO. The big question is whether the global market meltdown will force innovators to seek unusual means of securing financing. The big vendors with cash could help fund those efforts.

Channel recession or not? The channel will certainly not be immune, but the news might not be all that bad. The latest data from Raymond James indicates IT shipments through North America distributors—which account for $120 billion in hardware, software and networking gear—will be down 0.3 percent in the third quarter and the outlook for the fourth quarter looks flat to down. Consumer channel shipments are also slowing and are forecast to be down 1 percent this year. But during downturns, vendors turn to channel partners more than ever. For one, vendors can reduce their own operating costs by relying more on partners instead of direct-sales efforts and it gives them access to a broader customer market, particularly small businesses.

How will new channel initiatives be impacted? Samsung is preparing to enter the mainstream notebook market in a big way, competing against the likes of Lenovo, Dell and HP. Best known in the channel for its displays, Samsung has been making inroads in the printer market and is trying to move upstream. Like Samsung's move to diversify, Lenovo is shipping new servers in hopes of growing its channel footprint beyond ThinkPads. The problem it will face is trying to displace HP. Both are examples of vendors looking for ways to further leverage their channel and find avenues to grow their businesses. The only way they can be successful is helping VARs get through one of the most challenging economic periods we have faced in years.

Which channel issue are you watching most?
Everything Channel Senior Vice President And Editorial Director Robert C. DeMarzo is at [email protected].