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The Evolution of the Channel, 1994-2004

What a difference 10 years makes. At this week's XChange event in Chicago, Monty Cornell, group research director of CMP Channel Group research, showed just how far the channel has evolved and morphed since 1994.

Some of the key findings Cornell discussed at a research session on Monday included revenues generated by size of VAR, type of customer and by type of product, market share of major market players and a look at Annual Report Card (ARC).

Here are some specifics:

  • In 1994, there was a larger percentage of smaller VARs compared with today. Ten years ago, 52 percent of VARs reported generating less than $1million, 27 percent fell into the $1 million to $5 million space, and 21 percent generated more than $5 million. These days, that breakdown shifts upward, with 35 percent VARs falling into the $5 million and above category, while 46 percent report they are generating less than $1 million and 19 percent expect to generate $1 million to $5 million.

  • Services is the current big revenue generator. Fifty-three percent of VAR revenues are estimated to be generated from services this year, compared to 33 percent in 1994, though revenues for new vs. existing customers seems to be about the same as 10 years ago, 37 percent from new customers and 63 percent from existing customers.

  • Back in 1994, chances of VARs partnering with other solution providers was 50/50. Today, more than three quarters (76 percent) say they partner with other solution providers to increase the breath and depth of solutions they can offer, and as a result increase potential to generate higher overall revenue.

  • Top verticals remain the same from then and now: Manufacturing, health care, retail, banking and finance still top the list; only the rankings have changed slightly.

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