The year 2002 started amid uncertainty over the impact of the proposed marriage between Hewlett Packard (HP) and Compaq, the fall-out from the dotcom crash and the Enron and WorldCom accounting scandals, and what would happen to Microsoft's plans for a new licensing model.
In the end, the year didn't turn out to be as bad as it could have been, but it has been tough. The markets are yet to recover, and 2002 has been characterised by cutbacks, mergers and acquisitions. It has been a year of re-setting expectations - downwards. It was the year during which IT became a 'show me' market.
The HP merger finally went ahead, for better or worse, although the signs are good at the moment. The new company has formed its UK management team and is well on the way to refining its channel strategies.
The firm's commitment to the indirect route and its SME-focused Centres of Excellence programme in particular have won friends in the channel. While we are still in the transition phase Compaq is gradually becoming part of a bigger and more potent HP.
And it may take a heavyweight contender fighting the channel's corner to take on the monster that is Dell.
Over the past year Dell has set out its stall to enter the services market and take on the networking vendors. Cisco and Foundry were just two vendors that reacted by breaking their ties with the company.
Software vendors also started to feel the pinch and responded by coming down hard on the cheats and counterfeiters. Microsoft swept into action in March, launching more than 1,000 legal cases against UK resellers.
A raft of prosecutions and court cases followed with many of the company's own partners finding themselves in the firing line.
Microsoft might well have been in a vindictive mood; 2002 was not an easy year for the company. Faced with the remnants of antitrust lawsuits in the US it was also trying to deal with the switch to the Software Assurance programme at the end of July, amid a flurry of negative publicity.
In the end the change to the subscription model gave a boost to third-quarter sales for resellers and distributors as huge numbers of customers plumped for the Upgrade Advantage option.
Even so, Microsoft chose to introduce the Multi-Year Open scheme in September. This was aimed at large firms, but in January the vendor hinted that volume programmes introduced in 2001 would set the scene for schemes that would apply to smaller value-added resellers later.
But, if you thought the IT market was tough, spare a thought for the communications vendors. Cable & Wireless and Mitel announced job losses late in the year, but WorldCom's misery continued throughout.
The company had to restate its accounts on three occasions, wiping $9.1bn off its bottom line. Then in September it had to axe 2,000 EMEA jobs as part of restructuring. All this did nothing for confidence in the hi-tech sector and share prices plunged further.
Back in the PC market, the decline in sales took its toll on smaller vendors. Early in the year Time absorbed Tiny, and in the summer, Dan - a company that was far less dependent on the retail sector - went into receivership, blaming the tightening policies of credit firms.
Credit hit the headlines in the middle of the year as credit firms withdrew cover left, right and centre.
Rumours of rugs being pulled from under feet abounded as premiums rose and distributors started asking resellers for more evidence of financial stability.
Broadline distributors did not flinch, although it is certainly true that the market slump and the credit squeeze made life difficult.
Landis finally succumbed to a takeover bid by Sphinx, having been left in the lurch by Westcon. SCH Group came to the rescue of Metrologie, and just about every distributor announced a fall in turnover.
Even so they remained optimistic. After Ingram Micro announced a four per cent drop in third-quarter sales, Greg Spierkel, president of Ingram Micro Europe, said: "The underlying business is moving in the right direction."
However, he also said that the firm "will continue to 'right-size' the organisation where it makes sense, and focus on a profitable business".
Just about every company in the channel reduced its headcount in line with the decline in turnover this year. This kept some companies in the black.
Computer 2000, the UK arm of Tech Data, posted pre-tax profit of £7.9m for the year ended 31 January, on turnover down 17 per cent to £781m.
Northamber stayed the right side of the line, recording a pre-tax profit of £456,000 on turnover of £250m for the year ended 30 June. Its sales were slightly down from £299m the previous year.
For corporate resellers, it has been a difficult but mixed year. In September, SCH announced that it had raised its turnover by 7.5 per cent over the year ended 31 March to an impressive $1.5bn, although it had made acquisitions and may not have seen the full impact of the downturn.
Computacenter's turnover for the first six months of the year was £975m, down from £1.2bn in 2001. But it also predicted that full-year profits would be similar or perhaps even better than the £51.1m achieved last year.
Morse warned that customer confidence was weak and said that its first-quarter sales would be down significantly.
After such a difficult year, the mixed figures were hardly a surprise. There has been no real sign that the end of the tunnel is near, only a few indications that it might be around the corner.
The advice has remained the same: until we have a better idea, cut back on spending and look at ways to spark new business.
But, amid the pessimism, wireless networking supplied some much-needed warmth to the networking business, and growing concern over security helped to keep the corporate fires burning.
Most major network vendors, not least Cisco, worked hard to drive wireless local area network sales, and achieved some success. New ideas are being pursued in the wireless market, and more specialist firms are emerging.
A reseller called Wialess partnered with 3Com recently in a scheme to provide free wireless internet access for cafes and restaurants.
Wireless networking also prompted a number of scare stories as hackers cruised the City to see what they could pick up. Driven by post-11 September fears and the emergence of the Code Red virus, security became more of an issue as the year wore on. As the perceived threat grew, so did the opportunities.
Security vendors flocked to the UK to catch the wave, and previously unknown names such as Netscreen, SonicWall, Enterasys, Stonesoft and TopLayer started to appear alongside the likes of Check Point, Cisco and Nokia and the antivirus players.
With the proliferation of vendors and products came a struggle to claim control of the brightest technologies: Netscreen snapped up OneSecure, NetIQ bought Pentasafe and Network Associates acquired Traxess.
And the threats are still growing. In its most recent Risk Impact Summary report, ISS reported a 65 per cent increase in security threats compared with the year before.
The report also found that the number of new vulnerabilities grew by 8.5 per cent. With awareness of the dangers increasing it is hardly surprising that predictions for the security market - and for virtual private networks in particular - are very positive for next year.
In the mainstream market, some signs of a slow-burning return to confidence started to emerge as well.
PC vendors with strong indirect channels have exceeded PC shipment expectations in EMEA, as the region recorded modest market growth in the third quarter, according to research firm IDC.
A combination of solid notebook demand in the SME sector, good pricing and successful channel initiatives enabled Acer to record a 19 per cent increase in unit sales in the region.
Fujitsu Siemens also reported healthy growth of 7.2 per cent. IDC said that good product positioning, educational sales and an improved channel strategy had contributed to the success.
Total sales in the EMEA PC market grew by 3.3 per cent for the third quarter of 2002, compared with last year. In all, 8.7 million PC units shipped in the period. This is clearly still a big market.
The SME market and its tremendous - but largely still latent - demand for IT continued to offer some prospect of a return to sunnier days, as did the modernisation of the public sector.
Resellers that were focused on these markets did not find it easy, but most survived and many prospered.
Objective Computing, which won the Computer Reseller News SME Reseller of the Year Award at the Channel Awards in November, grew by 15 per cent. Another nominee for the award, Ibbd, saw sales rise by 20 per cent, with most of the revenue coming from services.
The increasing focus on this sector was underlined by vendors; HP and then Cisco and Fujitsu Siemens launched major channel programmes aimed at developing SME reseller business. IBM followed suit late in the year.
Support for the Department of Trade and Industry's Technology Means Business accreditation scheme grew as HP and Cisco made it integral to their plans.
However, 3Com, which moved away from the corporate market two years ago to focus on the SME and public sectors, returned to the big game in September.
Resellers focusing on education, health and local government also flourished amid the gloom, as the strength of the public sector projects that featured in this year's CRN/Syscap Approved Technology Innovator of the Month awards (see below) clearly demonstrated.
But there was nothing in 2002 to really capture the imagination unless, of course, you count the Tablet PC. Along with Toshiba, Acer, Fujitsu Siemens, Research Machines and HP, Microsoft launched the device in November to a market desperate for inspiration.
Whether it will make a difference to a market clouded by political and economic uncertainty remains to be seen.
2002 has been about survival as much as innovation and development. The year may have been uneventful but the industry has demonstrated just how much it has grown up.
The harsh conditions demand tight financial management; resellers have to provide better and more up-to-date information to gain credit and they have to make sure that they and their customers are on the right side of the licensing laws. The cowboys have gone and the pirates' days are numbered.
Furthermore, in 2002 many companies have not only survived, they have also turned in a profit. They have done this by facing up to the facts and making cutbacks when they were needed.
In the past, cuts have been made too late, with dire consequences. Today, most of the major vendors and distributors are well managed and, as a result, better equipped to get through the bad times.
Aside from this, the IT industry can't take much away from 2002. The most significant event, perhaps, was the completion of the HP/Compaq deal.
For most firms, survival was the priority, and those that made it will be better equipped to weather the storm. Re-setting expectations - our own and those of Wall Street - may not have been a bad thing. Next year, when less is expected, we may be able to deliver much more.
INNOVATORS OF THE MONTH 2002
Throughout the year, CRN, its sister magazine Computing and finance and leasing company Syscap have presented monthly Approved Technology Innovator of the Year awards.
These seek to recognise and reward innovation in the design, development and delivery of IT solutions by resellers in the UK. This year's winners were:
Corporate reseller Equanet won for the DataFarm online procurement system that enables customers to check availability and place orders over the net. This development also claimed the annual Innovator award for the private sector at the Channel Awards in November.
Suffolk-based box-office applications specialist Data Factors won for its design and delivery of a real-time web-based booking system for Tottenham Hotspur Football Club.
XMA of Nottingham won for the Hastings CommIT project, which takes a wireless network to different areas where access to technology is needed.
Joint winners were two specialist independent software vendors: Marlow-based transport industry specialist NetDespatch and Wiltshire-based voice systems expert MASC Communications. They developed a system that enables web-based updating of real-time delivery tracking systems by voice.
Birmingham-based developer Ezeehelp won for the provision of a remotely managed IP hosting service for the Connexions project in the north east.
Leeds-based integrator Esteem Systems won for a triple-site computing grid for York, Sheffield and Leeds Universities. Although the project did not win the annual award, it was highly commended by the judges.
A highly resilient back-end server system that acts as the foundation for the world's first computerised golf range won the award for Repton, a small integrator based in Hanworth, Middlesex.
A video conferencing system that enables the Royal Courts of Justice in London to hear and see testimony from witnesses and legal experts remotely claimed the October award for Newbury-based Prime Business Solutions. This project also won the annual award for the public sector.
Farnborough-based Equinox Solutions won the final monthly award for its work in designing and delivering a wide area network for London Local Education Authorities.
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