The omens are good for the EMEA channel this year, with an invigorated sales cycle fuelling a double-digit growth spurt for the region's leading resellers in 2014's opening quarter.
Analyst Canalys tracks the quarterly performance of the top eight publicly quoted resellers in EMEA, and Q1 numbers reveal that the octet posted top-line growth of 11 per cent compared with corresponding period last year. The eight - comprising Computacenter, Insight, Systemax, Bechtle, Cancom, Econocom, Atea, and Proact - have been on an upward curve for the last few quarters.
In Q1 2013 they posted three per cent cumulative revenue expansion, followed by a two per cent decline the following quarter. In the latter half of last year the group enjoyed sales growth of four per cent in Q3 and eight per cent in Q4. Canalys principal analyst Alastair Edwards claimed that the resellers were able to cash in during this year's opening quarter from a healthy product pipeline, led by - but not limited to - companies moving away from Windows XP.
Sales of top eight EMEA VARs
Q1 2013 +3%
Q2 2013 -2%
Q3 2013 +4%
Q4 2013 +7%
Q1 2014 +11%
"One of the major factors [behind the growth] is the migration from XP - that has fuelled product growth in desktops," he said. "We are also in the midst of a [wider] refresh cycle. There are a lot of end users who have not invested in infrastructure for the last three or four years, and there are companies that need to renew their servers, storage or networking."
The region's biggest channel firms have also benefited more than smaller rivals from enterprise vendors - including HP, Dell, and EMC - passing previously direct chunks of business over to partners, claimed Edwards.
"Those those big companies are capitalising more than anyone else on the shift from direct to indirect from certain vendors," he explained. "Where that is happening it tends to be large end customers that are being transferred to the channel."
The bigger picture
The leading EMEA resellers outperformed their counterparts at the top end of the vendor and distributor worlds, who grew four and five per cent respectively, according to Canalys figures
"One of the other factors driving growth is resellers developing relationships beyond the core vendors; they are looking at different and alternative suppliers," said Edwards. "They are also winning business from some of the big outsourcers, [where customers] are looking for alternative, more flexible and price-competitive suppliers. SMB customers are also looking to their resellers to become outsourced IT providers."
Although many of the growth drivers picked out by the Canalys man seem primarily applicable to the channel's biggest players, he insisted that there are a number of trends that impact the market that will benefit the rest of the industry. Although smaller resellers may not be able to swipe deals from the big SIs in the same manner of their larger rivals, there is a trend towards both end users and cloud services providers leaning on the channel more, claimed Edwards.
A survey of more than 200 resellers across Europe conducted by the analyst earlier in the year found three quarters were expecting to increase sales this year, with about a third forecasting a double-digit spike.
"[Cloud services providers] have recognised that the channel plays an incredibly important role in terms of their relationship with customers. It is a really positive time for the channel," he said. "I do not think the sort of growth [that we saw in Q1 is] sustainable for the rest of the year, but the channel should be expecting to grow five to 10 per cent; if they are not, then they are missing out."
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