The 1996 Eurochannels conference, organised by Global Touch, took place this year in Disneyland Paris. The conference agenda reflected the worries of both the big and small channel operators: financing the channel, decreasing margins and the problem of how to make money from the Internet.
There were also conference sessions on brand building, the millennium, firing the unprofitable customer, achieving channel profitability and marketing to consumers. As always, the conference was a good chance to meet the IT high-and-mighty in late-night schmoozing sessions at the bar of the art deco New York Hotel.
Denise Sangster, president and CEO of Global Touch, said at the beginning of the conference: 'This year's financial results from every vendor demonstrate a very soft market which we expect to continue through 1997.
This makes the issue of sustaining profitability even more critical today since most vendors rely on channel partners as the least-cost route to market.'
These were the main themes for debate, and within this framework there were remarkable differences of opinion. Limited access to credit, particularly as the inevitable process of distribution mergers continues, is affecting profitability, as well as their ability to buy and resell products.
But the conference had some weaknesses. There was a preponderance of vendors that abused their roles as sponsors of the conference to preach mini adverts to the assembled delegates. 'A bit more subtlety next year would be very much appreciated. It's not as if we don't know the score on sponsorship,' said one delegate.
Trading opportunities in the next year were the focus of the annual Eurochannels Executive Survey, conducted by Intelliquest. Most of the respondents expect 1997 to be a moderately better year than this one in both PCs and software. Only a small percentage of respondents said that conditions would get substantially better - less than nine per cent in both categories.
Forty per cent of dealers and distributors thought that finance was very important in selling PCs today, as did 14 per cent of final corporate purchasers. Only 15 per cent thought finance important to the consumer.
Not surprisingly, 61 per cent of respondents thought distributors and vendors should take more responsibility for channel financing in the software industry.
IBM emerged a clear leader as the vendor which produces the best financing options, closely followed by Hewlett Packard, with all other vendors trailing badly behind.
The Internet is still on all dealers' minds, but no one has yet provided dealers with a bundled Internet/intranet solution they can understand and market. The Internet remains an impenetrable problem as far as making the bottom line is concerned.
At Eurochannels, IBM was heavily promoting its Beyond the Net programmes.
'Beyond the Net is a partnership approach designed to train business partners on how they can increase customers' competitive edge in the Internet/intranet sector,' it announced.
Big Blue quoted figures from California-based market research firm Zona Research that show sales for software to run intranet servers will grow from $476 million last year to more than $4 billion in 1997 and $8 billion in 1998. This is four times the size of the Internet server business.
IBM expects similar growth rates in the UK.
Beyond the Net has already signed up 220 UK Vars to spearhead a new challenge to leverage a share of the intranet market IBM is not going to leave to Microsoft and Netscape. Ian Bonner, vice president of worldwide software channel marketing at IBM Software Group, said: 'We are aware that companies want to reduce their costs, not increase them, while increasing their productivity.'
Bonner is convinced dealers can make money out of the Web. That is why IBM is spending a lot of money launching the programme, which kicked off with a three-hour satellite broadcast last week to over 50 US locations.
In Europe, more than 20 seminars have been held in over 15 countries.
Participants worldwide will receive a free Beyond the Net CD set which includes 12 hours of computer-based training, not-for-resale code of the Internet Connection Server, sales tools and presentations.
But dealers' reactions to the Internet are still very slow. The Executive Survey found that only 17 per cent of respondents thought that there was a level of interest in corporates for establishing an intranet, but 38 per cent expected demand to be high within one year.
The survey also showed a low level of awareness about the Internet box (network computer) in the US and a low expectation of purchase. For a new technology which has been much hyped by Oracle's Larry Ellison, this is surprising. The survey also showed corporates were more interested in using intranets for internal communication than for anything else.
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