CRN Channel Business Research Report, January 2006
EXECUTIVE SUMMARY
The channel closed out 2005 on an up note.
Solution providers' sales expectations for the near term rose at the end of the year, marking the third straight monthly increase from hurricane-induced lows, according to CRN research. The overall sales expectations index came in at 94 for December, compared with 89 in November and the April 2004 benchmark of 100.
Two recent laggards, security and networking, lifted VARs' sales expectations in December. Security sales expectations perked up to their highest level since June, led by VPNs and intrusion detection.
Enterprise companies (those with at least 1,000 employees) continued to grow more positive about their near-term spending plans, according to the latest CRN Business Spending Survey. Seventy percent of the 125 large-company IT executives polled last month said they expected their company's technology budgets to increase over the next 12 months--the highest percentage in more than a year.
For the second month in a row, the list of the top 10 categories where solution providers have the highest near-term sales expectations showed much turnover. Six categories were new to the list in December: networking hardware, networking software, intrusion detection, business-class communications services, imaging/image management and Web services.
Only one security-related category--intrusion detection--was on that list in December, the fewest security categories since CRN began reporting this data in June 2004. This finding suggests that the line is becoming clearer between stand-alone security solutions such as antivirus and firewalls and all-in-one solutions that combine several IT security needs one package, with the latter becoming more prominent in the marketplace.
Other monthly channel research highlights included the following:
• Dell turned in a stunning performance in December. The percentage of solution providers citing the vendor's desktops, notebooks and servers as their best-selling jumped in December compared with November's figures. Dell's gains coincided with significant losses by custom systems, which lost ground in all major markets in December, particularly in desktop PCs and Unix-based servers.
• The level of spending priority for Internet-related categories such as voice over IP, wireless, Web services, application integration, CRM and online payment systems hit their highest levels in the past 18 months, with VoIP and wireless showing particularly strong increases in spending priorities compared to September.
• Networking hardware and networking software remain on the list of the top 10 products and technologies that VARs plan to sell or recommend to their small- and midsize-business clients over next three months. Solution providers continue their efforts to boost sales in these categories, despite the growing importance of new, cutting-edge technologies to the channel business model. It should be noted that "basic" categories like networking are still the foundation for revenue and profit among many solution providers.
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