IDC berates channel over business model

Lack of diversification contributing to negative growth, says analyst

Analyst IDC has blamed the channel for not diversifying its business model, suggesting that it is a contributing factor to the negative growth in the European PC hardware market this year.

But it fails to ask what vendors are doing to help their partners offer differentiation in a highly commoditised market or help with service provision, which may be higher margin but also offers higher overheads.

IDC also ignored the more enlightened reseller which does not believe that future growth and increased profitability will materialise by buying cohorts of new beige beasts.

UK resellers continue to move into services or partner with rivals to offer a more complete portfolio, including both products and services. IDC also warned that indirect channels are "facing an unprecedented challenge".

But for some time the channel has been facing change in the PC market. Many have either abandoned this market, gone under or pushed hard to offer higher-margin value-added services around products.

Research by vnunet.com's sister publication Computer Reseller News shows that our readers on average glean 70 per cent of revenue through value-added services, not through products alone. Many believe that, in the future, resellers will probably not hold any product themselves.

Sales, as IDC correctly predicted, will increasingly be conducted via the web. Fulfilment looks likely to come from distributors which will become more aligned to vendors.

These guys have supply chain, logistics, credit and all manner of value-added services that cannot be offered by vendors that are traditionally bad at this kind of activity.

But the reseller will remain a key link in the supply chain. Today's sell is business benefit, not cheap products. Resellers still offer end users a mix of service provision, product and an intimate knowledge of their customers' business.