CRN Research: VAR Sales Optimism Surges To Two-Year High

In a previous report, I focused on six technologies for growth--categories in which the percentage of solution providers planning to sell, resell or recommend has been increasing sharply in recent months.

But recent CRN survey data shows that solution provider optimism extends beyond these six categories, and that overall hardware and software sales expectations for the near term has jumped to its highest level in more than two years.

Combined with CRN research data showing a more positive attitude among business executives when it comes to technology spending plans, and a slowly but steadily improving economy, these results provide further evidence that the long-awaited recovery in technology spending could very well materialize in coming months.

CRN tracks near-term sales expectations on a monthly basis in eight different hardware and software categories, including desktops, notebooks, networking hardware, networking software, peripherals, PC servers, storage and Unix servers. Looking at these categories as a group, sales expectations have risen to their highest level since December 2000.

More important, overall sales expectations are also higher when compared with year-earlier levels, following an extended period when sales expectations had been declining on a year-over-year basis. This suggests that VARs are becoming more optimistic about a longer-term, sustained recovery in technology spending.

Sales expectations have surged in recent months in six of the eight individual hardware and software categories. Notebook sales expectations, for example, have reached their highest level since early 2000, and 12-month highs were reached in networking hardware and peripherals. However, sales expectations have weakened over the past three months in the Unix-server market, while expectations for storage hardware and software have remained relatively stable since the beginning of the year.

All of these trends mirror those CRN is seeing among business IT executives, who in recent months have also become much more positive about future IT spending.

Pete Busam, COO of Decisive Business Systems, a $5 million solution provider in Pennsauken, N.J., said he has seen his company's sales surge higher in the second and third quarters of this year.

Busam cites desktop replacement, server overhauls and IP telephony as driving factors for the sales growth. As Y2K warranties and leases expire, clients are saying, " 'Enough is enough. It's time to refresh my IT systems,' " he said. Busam also attributes the growth to increasing technology outsourcing, easier financing and prompt customer payment, all of which make him increasingly optimistic that the upswing represents more than just a short-term burst in business spending.

John Roberts is CRN's director of research. He can be reached at [email protected].