Storage

There's the complexity of the technology, and the complexity of the market. There's an educated end-user community and a vendor community moving from the enterprise downstream into small and midsize businesses, and branching out into other technology spaces such as security.

In the midst of all this, the 2007 CRN Profitability Study found revenue and gross margins across the storage market have slipped since last year's survey. The biggest average margin drop was for networked storage, which survey respondents reported fell 6.3 percentage points, from 21.2 percent to 14.9 percent over the past 12 months.

Yet survey respondents also said the number of customers has risen in both the network storage infrastructure and storage management segments. And as sales volume rises and storage capacity grows, it requires more sophisticated tools and services to manage the volume.

"It can be challenging, for sure," said Dave Hiechel, president and CEO of Eagle Software, an SMB-focused storage VAR in Salina, Kan. "On the disk side of things it gets really challenging and ugly."

To combat this, Eagle, which manages an 85 percent to 15 percent product-to-services revenue mix, looks harder for products that provide it with good margins. "Priority No. 1 is, 'How much can we make on a pure sale?' " Hiechel said.

Next: Storage profitability stats