The scary thing about the current hi-tech market is the extraordinary speed at which an apparently healthy company can unravel once it has the skids under it.
Recently two mighty companies have been hit by circumstances that few of us, if we are honest, saw coming.
First Enron, the giant Texan utility and telecoms trading house, nose dived into virtual bankruptcy. The full story of how America's 10th-largest company dropped in value by a staggering 99 per cent over a matter of weeks may never be known.
But it is well known that, to atone for a crippling debt burden, a cabal of the company's top management decided to do something fishy and highly secretive with the books. They were caught out, investors withdrew overnight and everything collapsed like a sumo wrestler's deckchair.
Storage firm EMC, although in less trouble, has also suffered a rapid reversal of fortune in recent weeks. As with Enron, responsibility clearly lies with senior management. Unlike Enron, it will almost certainly live to tell the tale. Enron's example contains lessons that almost all of the reseller channel can benefit from.
EMC's mistake was to stick with a winning formula too long. The hardware it marketed in the late 1990s was streets ahead of the competition.
It became the platform of choice for corporates everywhere which knew and respected an innovative market leader when they saw one. Far larger companies struggled in its wake.
EMC frittered this lead by failing to adjust to a market in which software, not hardware, is central to corporate storage solutions. Storage management will account for about 75 per cent of the cost of a storage implementation within two years, say market observers. Eroding margins on kit will relegate it to the status of an almost irrelevant commodity.
Now chief executive Joe Tucci has woken up to this, and has shifted the company's focus to software development. The need is for software that works with the products of multiple vendors in a networked environment. The days when one vendor supplied everything are long gone.
In this new look market, the channel will be king. Resellers armed with a grasp of how to integrate all these different strands, partnered with distributors which can supply it all, will be indispensable.
If this is not incentive enough, then consider how quickly failure can overtake firms that are not ready for the future.
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