Tech companies may be forgiven if they have dug themselves in increasingly over the past year, and are only now starting to peer out from behind the barricades to see if it is safe enough to emerge. This has been a somewhat more tumultuous year than usual. Now, as 2011 finally draws to a close, those still standing will be breathing a sigh of relief.
The temperature dropped enough to ice up the entire channel in the new year, as some of the worst winter weather for 30 years disrupted UK transport links and logistics. On 1 January, Estonia became the 17th nation to adopt the euro - an action it may perhaps be regretting now. The troubles in the eurozone also turned out to represent yet another headwind for the UK economy, as the double goals of growth and debt reduction slipped further away.
And then there were earthquakes, nuclear leakage, floods and rioting to keep us all on our toes - or, perhaps, refocus customers’ minds on virtualisation and disaster recovery.
The actions of the UK’s coalition government received a mixed reception, and as the first quarter wore on, the jury appeared to still be out on whether they were working -- or at least working fast enough to truly help businesses.
Public sector cost cuts began to kick in, meaning fewer deals were likely for the channel in this once-lucrative and relatively reliable market. However, channel players are nothing if not game. Some, such as Stone Group, are still keen to target education customers - which undoubtedly still have needs best answered by improved IT - and some big deals are still being won, especially if the project offers a chance to cut costs.
However, suspicions were raised in February that some VARs may be overselling IT to schools in a bid to keep up their profits.
Some specialists looked further afield for opportunities - Steljes, for instance, increased its push for corporate sales. Others - including Westcoast - drove into healthcare, which also has an ongoing need for the right IT solutions.
No matter the vertical strategy, 2011 has been a year when partnering has moved further to the fore than ever.
Graeme Edwards, head of commercial development and marketing at software vendor Sage, says there has been some positive news in the business software area, despite the endless economic strife and tribulation that make the headlines.
“This year, particularly in the channel, we have seen significant growth in some areas that our partners are generating,” he says.
CRM and ERP over mobile devices such as the iPad and BlackBerry are doing well, he adds.
Music to the ears of many small vendors and ISVs is that the “name” vendors of the past 10 years were increasingly challenged across a range of markets, in part due to the opportunities presented by cloud computing. Commentators suggested that the cloud gives smaller technology providers a better chance - they can scale up and down more quickly, compete over a wider geographical area or remotely, and minimise the hardware infrastructure needed to support a venture.
IBM continued to forge ahead with its Smarter Planet vision, taking its partners along with it.
It also continued to underline its software and services as a revenue opportunity - another area where the lustre appeared to fade during the year overall (although not for Big Blue). IT services are becoming more commoditised, and industrialised.
In addition, IBM also found time to celebrate its centenary year.
Perhaps the biggest IT vendor of all, Apple, was rocked to its foundations when Steve Jobs finally lost his battle with cancer on 5 October 2011. And it remains to be seen what the ultimate effect of his loss will be on this hugely popular, even iconic, company.
Meanwhile, those twin overarching themes of cloud and mobility hung over everyone’s heads all year, as predicted by CRN in 2011’s first issue on 17 January. Mobile apps and integration were seen as particularly promising, especially as Microsoft launched Office 365.
Smaller vendors such as Vision Solutions and Exinda appeared to turn more to the channel this year, realising the value that VARs and the like can add. And more UK tech providers either looked abroad for business or intensified their overseas operation, including Computacenter, Maverick, Midwich and Wick Hill, which turned 35 this year.
As in other sectors, channel companies under pressure increasingly plumped for the year’s buzz words of cloud and mobility in the hope of puffing up their revenue.
Others turned more than ever to SMB customers - a segment that is sometimes put in the “too hard” basket, particularly by large vendors, but representing more than 90 per cent of all businesses. According to some, SMBs remain in a kind of technology “Dark Age” - so who better to ride to the rescue than the channel?
Dave Ellis (pictured, right), director of new technology and services at distributor Computerlinks, says the year has worked out well overall for the company and its VARs, and this is probably because of its focus on areas that are still deemed necessary, such as security, storage, and virtualisation, even when customers are cutting costs.
“It has been tougher than it has been before, looking back over the years. The market has not grown at the same rate,” Ellis says. “But areas such as security are being driven by compliance. There are all kinds of new areas that if you can show some RoI, people are buying.”
The distribution landscape continued its metamorphosis and consolidation through the year, with a swathe of vendors reviewing and restructuring their distribution line-up - including Avaya, Symantec, Microsoft and CA Technologies, which also celebrated 35 years in business - and a cartload of mergers and acquisitions across the channel forcing new thinking on reseller portfolios.
The M&A activity through the year kicked off in January with Kelway and Intrinsic. Midwich, Arrow and Ingram also added to their acquisition tally.
Unsurprisingly, insolvencies were up in the channel as well. Was this, even partly, because of a reluctance within some companies to move with the times and keep pace with ever-increasing change (see box below)?
Interestingly, channel fraud levels also appeared to be on the rise towards the end of summer, according to Graydon. Could this have been a case of desperate times encouraging more desperate measures?
Security sales - long one of the most rock-solid categories for the channel - stagnated in 2011, with vendors increasingly struggling to maintain relevance in the minds of customers against an array of ever-more complex and targeted threats. And vendors themselves -- such as RSA -- fell foul of attacks.
Hardware sales returned to recovery to some degree during the year. Sales of mobile products such as e-books, e-readers, tablets and smartphones continued to rise, although netbooks - such a big hit in previous years - began to lose ground against popular new devices.
In the audiovisual arena, digital signage moved more centre stage. Collaborative video communications on the whole took more mind and market share among customers of all sizes. Meanwhile, document management projects, while remaining aggressively unglamorous, proliferated as organisations looked to reduce costs in previously ignored areas.
This affected print revenue as well, pushing vendors such as Xerox, Brother and Oki to focus more on MPS. Green themes remained, so long as they tied in with cost-effective compliance requirements.
James Kight (pictured, left), managing director of VAR Printerland, says his firm has had a great year - although it has had to work harder than ever to achieve expansion in a market where 95 per cent of its customers are SMBs. It has added 10 staff, taking the total headcount to 35.
“We are having to do more work to get the results,” Kight says. “We have more outbound sales staff now, who have been out there hunting for the work, and we have 100,000 users on our database who have been active in the past three months. You have to be more proactive.”
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