We’ve been hearing some good news lately – though the economy may still be in a slump, there are signs of recovery. But disties are concerned we could still lose more than a few resellers along the way.
Bernstein Research is forecasting a return to PC unit growth next year, with growth of 11 per cent in 2010, 13 per cent in 2011 and 12 per cent in 2012. The same thing happened during the 2001/2002 downturn, where PC unit growth bounced back to above-average levels for the following three years.
Both HP (NYSE: HPQ)and Dell have expressed similar sentiments: They expect to see significant PC refresh cycles after these recession-related delays. After all, there’s only so long an enterprise can wait before their technology is so old and so outdated that it’s more a burden than a business-enabler.
Microsoft‘s release of Windows 7 in October should also help move things along, since many enterprises are skipping Vista altogether and waiting for the much-anticipated next-generation OS.
Despite this good news, disties are expecting to see more reseller collapses later this year. Just this week, technology services reseller MIS Group shut down unexpectedly, leaving hundreds of customers in the lurch (it left a message on its Web site, blaming the poor economy, tight credit and market circumstances for its demise). This has left its largest vendor partner, Sage Software, scrambling to support those customers, and is an example of how even large, established resellers are feeling the pressure. MIS was Sage’s top business partner in North America in 2007 and 2008.
Last month at the Global Technology Distribution Council conference in London, disties expressed their concern over this issue, and what they’re doing to help.
Greg Spierkel, CEO of Ingram Micro, said he expected to see 15 per cent of the distie’s reseller base disappear this year, compared to the usual churn rate of five to 10 per cent – but the bulk of that would be mom-and-pop operations. The culprit: lack of credit. While some resellers may be able to hang on for half a year, after that it gets tougher to survive.
Graeme Watt, Bell Micro’s president of worldwide distribution, said the distie was being cautious on bigger projects. While they weren’t walking away from bids, they would consider looking at other ways to deliver credit. Some disties are looking for alternatives, such as attaching the risk to the end-user customer, as opposed to the reseller delivering the solution.
The key to survival, it seems, is just hanging in there – with the help of some credit – until those PC refresh cycles pick up.
