Network sales below forecasts

Two-thirds of European resellers reported lower-than-expected figures

Networking equipment sales were below expectations in the fourth quarter of 2002 for most European resellers, according to channel research firm Global Touch.

The latest networking Channel Tracker report, which focused on sales in the period 1 October to 30 December last year, found that 64 per cent of European resellers had reported lower-than-expected sales.

"This is not a surprise. The European market has been declining for the past four quarters," said Denise Sangster, chief executive of Global Touch.

In the third quarter of 2002, 71 per cent of European resellers said that sales were below expectations. But the shortfall for the final quarter was higher than expected.

"What is a surprise is that the fourth quarter was softer than normal," said Sangster, adding that a corporate spending "chill" was to blame.

George Sanger, sales director at reseller Xpert Systems, said that he wasn't surprised by the report because December is naturally a slower month.

"In our experience, it is becoming a two-week month because the wind-down to Christmas is taking longer and as a result investments by corporates are being delayed," he said.

"The markets are depressed and there needs to be a lot of corporate spending to raise it. But this is not going to happen with the threat of war."

One market which remains resilient is the SME sector, to which vendors are now turning to maintain sales.

Networking giant Cisco is one of the firms increasing its SME offering.

Nick Watson, Cisco's UK head of unified channels, said: "We have increased the number of people we have generating mid-market leads by 50 per cent, and we are working with distributors on our small office/home office offering."

Despite the gloom, the market is beginning to look up, according to the survey respondents.

Thirty-nine per cent of European resellers said that they expected networking turnover for 2003 to be higher than 2002, and 85 per cent said that sales would accelerate into 2004.