Canalys Forum 2021: Six bold statements from CEO Steve Brazier's keynote

From price rises to hybrid working, here are six of the boldest claims Steve Brazier made in his Canalys Forum keynote

Canalys' president and CEO Steve Brazier addressed attendees of the virtual Canalys Forum 2021 conference yesterday to give his headline speech, highlighting "10 key trends" impacting the channel.

Among the topics discussed were supply shortages, price rises, the need for businesses to upgrade their networks, hybrid working, cybersecurity and plenty more.

Here are six of the boldest statement Brazier made in his speech…

‘There is no doubt that one of the reasons why the channel is doing very well right now is shortages.'

Supply chain issues partly due to the shortage of semiconductors have been well documented and have caused significant delays to a whole range of hardware since the start of the pandemic.

But Brazier pointed out that there has also been positives to the situation, claiming that the supply shortages have been a factor in the channel's growth over the past year.

"The situation is particularly bad in the UK, where Brexit has just added a layer of complexity that no one could cope with, so we're seeing even greater shortages in the UK," he said.

"But there are supply shortages everywhere, leading to price rises everywhere, and that's going to be an ongoing challenge. Now for you, the channel, what do supply shortages mean? Well, it might mean you can't invoice an order at the end of a month or a quarter and you miss your target. I guess that's bad news.

"But it also means a whole lot of good news. Because with supply shortages, prices go up. With supply shortages, you change the conversation with your customer from which product is cheaper to which product can I deliver first?

"And with supply shortages, you could also go to the customer and say, ‘well, you may want to stick with buying that brand but there might be a six-month delay, have you considered an alternative brand?' and that choice creates margins. So, there is no doubt that one of the reasons why the channel is doing very well right now is shortages."

‘The key requirement to reduce our dependency on TSMC and on Taiwan is absolutely essential.'

Brazier noted the importance of Taiwan's production of semiconductors and how it became more noticeable during the pandemic while adding that this dependency carries significant risks for the IT industry.

He said: "The world suddenly realised its dependency on Taiwan and in particular, on the major semiconductor company there TSMC, which is responsible on its own for producing around 50 per cent of all semiconductors produced in foundries in the world.

"And so what are the risks? Well, the risks are shortages of water, the risks are the rising price of energy which we know is happening around the world. So there are key risks that can happen to manufacturing in Taiwan and we've seen TSMC say prices will rise 20 per cent over the summer.

"Also, of course, from the Chinese point of view, Taiwan is a disputed territory. There is always a threat of political or even, hopefully not, military exposure from China into Taiwan.

"The key requirement to reduce our dependency on one foundry, TSMC, and on Taiwan is absolutely essential."

‘Well run companies replaced the network Wi-Fi in their offices, badly run companies did not.'

As employees at companies across Europe start to return to offices, Brazier believes there will be a huge demand for better Wi-Fi and connectivity in order to keep up with the increasing use of video communications - highlighting this as a key area of growth for the channel.

"Looking at the market data, I'm afraid that tells us there are more badly run companies than good market companies, because companies last year couldn't focus on improving their office while everyone was out; they were all in panic mode," he said.

"So what's happening now is employees are going back to the office and they want to do their Zoom calls or their Teams calls, or their Canapii calls, and they find they can't do it in the office because they don't have the bandwidth.

"If they want to work, they have to go home to work in order to get the kind of bandwidth they are used to. There will be massive investments in Wi-Fi, and campus networking to support the Wi-Fi, in offices around the world over the next 12 months. That should be the number one single growth point of the tech industry. It's a massive opportunity."

‘Deciding when or where people work is your number one differentiator and will define your culture over the next 12 to 18 months. Get the decision wrong and an exodus of staff is likely.'

Brazier said the "number one challenge" facing tech companies over the next year is how to address the question of hybrid and flexible working, and to what extent businesses should allow it.

"If anyone tells you at this conference or anywhere else that they know the answer to that question, they're wrong. We'll only know the true answer in about 10 years' time when all the studies are done about the different policies and which ones appear to be the most successful," he said.

"Instead, leaders of companies have to make a decision based on imperfect evidence and decide on the future culture of their company.

"But there are some big things to think about. One is, at the moment, we are paid where we work. If you go to fully remote working, what do you do? Do you pay everyone the same? Sounds nice, it almost sounds fair.

"But if you pay everyone the same around the world, that means the salaries in Africa and in Asia have to go up dramatically and the salaries in the US go down. And if the salaries in the US, particularly in Silicon Valley, go down, you lose all your people.

"The second thing about going fully remote is once you close your offices and you say people can live anywhere, they will live anywhere, which means you can never recreate those offices because everyone lives far away."

‘All companies will be hackable. Why? Because the biggest risk to a company is its internal people.'

Addressing the issue of cybersecurity, Brazier said the biggest danger facing channel partners in the years to come will be their own staff deciding to accept incentives from outside groups to ensure ransomware infects systems.

He said: "All companies will be hackable. Why? Because the biggest risk to a company is its internal people who, if offered a big enough incentive, will allow a USB stick to be connected to their PC so that malware can infiltrate the network.

"That is an unsolvable problem, and if it's not a USB, it could be a click on a website. And then think a little bit further about what might start to happen.

"Insider penetration of company networks is the biggest threat now as the outside borders get more and more protected and it's very, very difficult to solve."

‘I'm afraid to say that the likelihood of a market crash and economic recession next year is pretty high. We would predict stock prices will be lower in six months' time than they are today.'

In his final point, Brazier warned that the actions of China clamping down on industries like technology, and inflation in Europe, could lead to a market crash next year.

"What does that mean for you in the tech channel? Well, if there's a major economic shock, which is highly possible because of China, because of inflation, obviously that will have consequences, you'll lose some business.

"But we think, overall, what it will mean is you'll start seeing single digit growth, maybe your growth will be flat. But technology will also be the solution to most of the crisis - increased efficiency, automating more solutions that you need less people for because people are scarce.

"So once again, although there's a global macro-economic threat, we think the advice would be to carry on running as you are but keep in mind you might need a bit of extra cash for a turbulent few months that may be ahead if there is some sort of crisis."