Channel Digest: Pay no attention to the AI behind the curtain

This week's edition of CRN's weekly Channel Digest newsletter covers the recent surge in vendor and partner M&A and AI a key driver

At the end of 2023, the way forward for channel partners seemed clear.

We knew this year would be M&A heavy, but even with all the hints from channel partners of upcoming buyouts, few could have predicted the deluge that was about to come.

This week on CRN, we kicked off with a round-up of distributors' preferences when acquiring. Distie heavyweights Alex Tatham, David Watts, Paul Eccleston and Dale Foster brought up anything from scale, to specific capabilities like as-a-service and data analytics, to geographic and cultural fit.

This set the stage nicely for the rest of the week, which saw buyouts from QBS, Focus Group and Core Technology Services in the UK, covering the gamut of scale, capabilities and geographical expansion.

While the channel made moves, vendors weren't standing still either with Veeam and KnowBe4 announcing mergers with ransomware protection specialist Coveware and email security firm Egress, respectively, this week.

Time will tell how these companies trading hands will affect partner networks. But if the Broadcom/VMware and SoftwareOne sagas taught us anything, it's that it's best not to count your chickens before they hatch.

Salesforce dropping a planned buyout of data management software firm, Informatica, over financial disagreements proved this truer than ever - even in a highly M&A friendly economic climate.

What is all of this consolidation driven by? The picture is complicated, but the need to quickly acquire new skills and services around AI can't be overstated. Additionally, gaining scale to win favourable terms from big tech, and constrained organic growth potential could also play a role.

The impact of AI on the M&A landscape is inescapable in 2024. As the technology is set to revolutionise businesses and boost valuations across the land, the past few months have seen regulators trying to play catch-up.

So far, the UK Government and regulatory bodies have broadly positioned themselves as AI-friendly and open to investment.

But a healthy AI sector requires competition. To that end, the Competition and Markets Authority (CMA) recently released a report outlining three key areas of concern and revealing plans for further scrutiny of AI firms developing foundation models. CRN, as usual, sought out partners' take.

Allan Kaye, co-founder and MD at British reseller Vespertec, broadly welcomed the move, but believes that the level playing field approach will be far more effective in software than in hardware, where the high cost of entry naturally leads to concentration around chip giants like NVIDIA.

Infinity Group CEO Rob Young, on the other hand, cautioned against heavy-handed regulation, which he believes could "greatly hinder" innovation.

"When done well and with customers' best interests at heart, market consolidation is a win-win, particularly when partnerships and acquisitions are driven by shared strategic aims," Young said, in a statement that could not be more apt in the current moment.

Prophetic words? Let's see how the year plays out.

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