If there's one truism in IT economics it's that vendors turn away from the channel when times are good and turn to the channel when times are bad.
Times are bad in China for American IT companies, and those troubles could come home as a benefit to the North American and European channels.
HP's quarterly and full-year 2013 could mark a turning point in the IT marketplace as big vendors struggle to find their footing amid disruptions caused by cloud computing, declining sales of commodity technologies and decreased demand from emerging markets, particularly China.
Despite taking hard hits from declining PC and printer sales, HP surprised the market over the summer by reporting stronger than expected earnings.
While HP still lost money in nearly every product and service segment, the losses weren't as bad as expected and were seen as a sign that HP's recovery plan was working.
Analysts expect HP will report fourth quarter earnings of just shy of $28bn (£17.2bn) and full year 2013 sales of $111bn. This is down from 2012 earnings, which tallied $120bn.
Quarterly sales are expected to be soft as PC sales continue to slip and China pulls back on IT spending.
China IT spending is of particular concern. IBM Corp. and Cisco Systems have reported softer sales in the world's second largest economy, sinking their revenue and profits.
Some say Cisco and IBM's China woes are a backlash of the NSA surveillance programme. Just as the US government warned American firms against buying equipment from Chinese companies, particularly Huawei, China may be retreating from American suppliers out of concern of their cooperation in spying.
Analysts fear HP could be caught up in the same concerns. HP has made enterprise products in security, networking, Big Data and cloud computing the cornerstone of its recovery efforts.
So what does the price of tea in China have to do with anything concerning American and European solution providers? Plenty.
If big vendors are suffering a meltdown in China because of spying concerns, a shift to sourcing through domestic IT firms such as Lenovo and Huawei, or simple market saturation, the ilk of IBM, HP and Microsoft will turn to the channel in other regions to bolster their revenue and fortunes.
This is what happened in the wake of the 2008 financial meltdown. When Wall Street crashed and the credit markets froze, vendors moved to cut costs and uncover every revenue opportunity possible.
The result: a reduction in fixed operational costs - including sales - and a shift to channel partners to drive sales and support customers.
If HP's earnings come in as soft as analysts expect and the problem is pegged on China, tech providers can expect the big vendors to pivot back to partner networks to make up the losses and provide incremental growth.
Larry Walsh is chief executive and president of Channelnomics
As part of our special editorial relationship, CRN is republishing this article from Channelnomics
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